Something to Consider

The following email was forwarded to me today, and I thought I would share it here, it makes some good points. I really don't agree with all of this- obviously there is an agenda at work, but at the same time I would really hate to see our car makers fail. It is so sad to lose our domestic manufacturers, I hope the big greedy ones will step aside and let the business rebuild.

Our office, our families and our entire state of Michigan has been glued to the news the past few weeks watching the auto bridge loan saga unfold. Political views aside, it has been a fascinating PR issue.
It’s clear that the domestic industry has done a poor job reaching out to Washington and the rest of the country for too many years. As PR professionals, one of our objectives is always to make sure
that information in the news is accurate, so I cringe with nearly every article or newscast I see that talks about the auto bailouts (point #1…it’s a loan, not a bailout). So, I am on a bit of a crusade to set the record straight wherever possible.

Each of you are leaders in the world of public opinion; if I may, I’d like to share a few myths/facts about the auto industry that perhaps you could share at holiday parties if the topic comes up (though, if the auto industry is coming up at your holiday parties, it might be time to examine y our circle of friends). Much of this information comes from the Detroit Free Press, theengineofdemocracy.com and industry sources.

Myth No. 1: Nobody buys the vehicles of the Big 3
Reality: GM, Ford and Chrysler sold 8.5 million vehicles in the United States last year. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide -- about 3,000 more than Toyota. Ford outsold Honda by 850,000 and Nissan by more than 1.3 million vehicles in the United States last year. Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.
The #1 and #2 top-selling vehicles in this country are from GM and Ford, and 5 of the top 10 are made by the Big 3.
There are over 40 car-producing companies globally…3 companies, Ford, GM and Chrysler, account for more than 50% of market share of the cars sold around the world. Somebody’s buying their vehicles.

Myth No. 2: Their cars are built poorly
Reality: The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers." The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry. The 2008 Chevy Silverado earned the highest ranking in the Large Truck category; the Dodge Dakota and Ford Ranger were #1 and 2 for Midsize Pickup initial quality.
The 2008 North American Car of the Year was the Chevy Malibu; in 2007, it was the Saturn Aura, and the Truck of the Year was the Chevy Silverado.

If you look at recalls in 2008, the worst auto companies (those with the most recalls as a percent of sales) in North America are 1. Hyundai, 2. Mitsubishi, 3. Volkswagen and 4. Nissan. The only domestic automaker to break the top 5 in recall rates is GM, which is essentially tied with Mercedes.

Have you driven any of their cars lately? The Cadillac CTS, the Chevy Malibu, the Ford Fusion, the Buick Enclave, the Dodge Grand Caravan, and so many others…incredible, innovative cars. These are not the Citations and Pintos of the early ‘80s.

Myth No. 3: They build gas-guzzlers
Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway. The most fuel-efficient Chevrolet Malibu gets 33 m.p.g. on the highway, 2 m.p.g. better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient non-hybrid Honda Civic.
And consider this: GM has 2 times as many models that get 30 mpg or better than its nearest competitor. GM also has 8 hybrids on the road today with a total of 20 planned by 2012. Its 2-Mode Chevy Tahoe full-size SUV was named Green Car of the Year in Los Angeles last November. And the new Ford Fusion Hybrid and Mercury Milan Hybrid beat the Toyota Camry Hybrid by 6 miles per gallon.

Myth No. 4: They already got a $25-billion bailout
Reality: None of that money has been lent out and may not be for more than a year. In addition, it can, by law, be used only to invest in future energy-efficient vehicles and technology, so it has no effect on the shortage of operating cash the companies face because of the economic slowdown that's killing them now.
An interesting point here – it’s reported that the Japanese government paid for the R&D for the Toyota Prius, a 10-year project that cost nearly $100 billion.

Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs
Reality: The domestics' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.
The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than Toyota and Nissan's full-size pickups.

Myth No. 6: Their workers are lazy and overpaid
Reality: Chrysler tied Toyota as the most productive automaker in North America this year, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM. And GM has more plants today leading their respective segments in productivity tha n any other competitor, foreign or domestic.
Those opposed to the bridge loan often cite the $70-an-hour wage and benefit figure for UAW workers. This figure inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That's like assuming you get your parents' retirement and Social Security benefits in addition to your own income.
Hourly pay for assembly line workers maxes out at $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There's no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they're working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis. Overall, labor makes up just 10% of the cost to produce a vehicle…’labor’ is not the real cause of the current state of the industry, the economy is.
Myth No. 7: The Big Three are dinosaurs and have done nothing to improve their bottom lines
Reality: Ford was profitable in the first quarter of 2008 before the economic crisis began. The company has been working for two years on improving its balance sheet through aggressive restructuring while accelerating the development of safe, fuel-efficient and high quality products.
GM has reduced structural costs in North America by $9 billion since 2005; eliminated raises and bonuses for executives and salaried employees; and aggressively addressed its manufacturing footprint, shifting from trucks and SUVs to smaller cars and crossovers.
Daimler-Benz bought Chrysler in the late 90s, stripped it down like an abandoned car, and spit it back out. Its new owner, Cerberus, is acting fast to improve its foundation; the economic downturn could not have come at a worse time for this company.
Myth No. 8: Letting them die won’t affect me
Reality: The auto industry provides $293 billion in annual economic benefit to this country. If the domestic automakers do not receive this loan to help them weather the economic downturn and credit crunch brought on by the financial markets, the manufacturing base of the U.S. is in jeopardy. The reason Toyota, Honda and others assemble some of their cars is because of the Big 3. If the Big 3 disappear, there will be little reason for the others to continue manufacturing here.
The auto industry is a complicated, far-reaching industry that impacts millions of jobs. For example, the automotive supplier industry, which would face a disastrous domino effect should the Big 3 fail, employs 4.5 million people in the U.S. alone. The supplier industry is the largest manufacturing employer in seven states (Ohio, Indiana, Kentucky, Michigan, Missouri, South Carolina, Tennessee).
In the days following 9/1 1, the president went to the Big 3 and requested they do something to get the economy going. In addition to sending hundreds of vehicles and tens of millions of dollars to aid victims and the city, the companies quickly introduced its “Get America Moving” program with 0% financing and incentives on vehicles. The companies stepped up again to aid the victims of Hurricane Katrina. Go back to World War II when, again at the request of our government, the companies stopped producing cars to instead make tanks, armor, ammunition and supplies to support our troops. These actions were taken without hesitation, complaint or question, to support the country…the same one that now seems to take joy in stepping on them.
It is easily arguable that a domestic manufacturing base is essential to national security. Other governments seem to understand this notion. In Germany, the government agreed last month to $1.25 billion in loan guarantees to its auto industry. The French government has agreed to a $1.9 billion boost for its auto industry, the provision of a $1300 bonus to car buyers who trade in their old cars on a new, more fuel efficient one, and $400 million in state aid for R&D and restructuring costs. The Swedish gov ernment has agreed to provide over $3 billion in the form of credit guarantees, loans, and R&D investment to Volvo and Saab. And Australia recently announced $4.2 billion of taxpayer funds would be made available to make the Australian auto industry economically and environmentally sustainable by 2020. Industry minister Kim Carr noted that between 2001 and 2007 the auto industry received $2.5 billion in assistance under the automotive competitiveness and investment scheme and spent 10 times that amount on plants, equipment, research and development, wages, salaries and taxes.

The automakers are requesting a bridge loan, not a bailout as Wall Street has done. The companies need the loan – which they will pay back with interest as they have done before – because the U.S. credit freeze has essentially closed capital markets and squeezed their cash flow from operations that are being devastated by extremely low consumer demand across the industry. This freeze happened as the automakers are in the midst of huge restructuring costs, heavy pension and health care payments and massive-yet-crucial product and advanced technology investments so that today’s and tomorrow’s vehicles are even safer and more environmentally friendly.


If you’ve made it this far, thanks for listening, and please feel free to share this information. If there’s a side or point I’m not considering, please let me know – I welcome any thoughts and views you have on the issue. Now get out there and test drive some vehicles!