Posted by Marc Hodak on March 16, 2010 under History | 
California politicians and the UAW are loudly berating Toyota for its decision to close their NUMMI plant in Fremont, California. Most of the media is piling on, with the liberal commentariat pronouncing “treachery” and “ingratitude” for all that California customer’s and workers have given to Toyota over the years, as if there were something other than a commercial exchange between them. The simple reality is that Toyota is making a business decision. It’s Fremont plant is not making money anymore, especially after GM pulled out of its part of it. The commentariat insists it’s never that simple, and is spinning all manner of anti-business narratives out of this decision.
Ok, let’s go with “it’s not that simple.” Only, my narrative won’t assume that Toyota is just there paying workers and suppliers and tax authorities, as if the plant’s existence were a given. My narrative will begin at the beginning, before Toyota moved into Fremont.
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Posted by Marc Hodak on under Executive compensation, Reporting on pay |
UBS is once again paying competitive levels of compensation to try to stanch its exodus of talent, and replace it with similar talent. Their top-earner last year, pulling down $12 million, was their co-head of investment banking Carsten Kengeter. UBS lured him from Goldman Sachs in 2008, and his division narrowed its losses in 2009 by about $25 billion, and is now on a path to profitability. One might think it not unreasonable that his bosses could judge that he made a $12 million difference. But the people who are paid to carp at other people’s pay had another view:
“It’s strange that only more than a year after UBS’s biggest crisis, the bank is once again paying huge bonuses in an area that caused the most trouble,” said Roby Tschopp, director of Swiss activist group Actares. “It shows that under Chairman [Kaspar] Villiger, the bank has lost its sense to act in the interest of the people.”
The latter comment lays bare the difference in mission. UBS’s top management, assumed by the press and critics to be looking for ways to pad the pockets of management, is acting remarkably as if it cares about the bank and its shareholders. The “Swiss activist” organization that is advising shareholders wants the bank to act “in the interests of the people,” as if those interest are somehow served by a bank that suffers for lack of competitiveness.
As usual, the press ignores or glosses over this difference between the managers and the critics. It swallows whole the activist’s premise that the board and managers are working against the shareholders’ interests, and that those interests would be much better served if their managers were paid what the activists think they should be paid or, better yet, if their pay were put up to a popular vote.
Posted by Marc Hodak on March 6, 2010 under Governance, Politics |
The main reason that the USPS will never make any money is that it can’t get rid of its infrastructure. It must have a post office in every district and letter carriers visiting every house six (soon to be five?) days a week. They can’t get rid of their post offices because Congress pays the bills, and no congressman is willing to let their post office get shut down. They won’t give up universal delivery because their unions, who help elect those congressmen, don’t want to give up those jobs with, say, requiring rural people to come into town to pick up their mail, like they do their groceries and sundries.
I know there are all sorts of other arguments out there about why we need a postal service in the age of the internet, with UPS, FedEx and a whole industry of couriers and delivery services, etc., but they’re all irrelevant against the political considerations. With congressional support, the USPS exists in its present form. Without congressional support, it doesn’t.
Now that Congress has similar control over Government Motors, are we seeing the same political pressure take hold in that firm?
GM would not offer any details on Friday about which dealerships it was reinstating and where they are located. It said it chose the 661 based on a variety of criteria, including sales and other business factors.
For you, my loyal readers, I have obtained the criteria and their weighting from an unimpeachable source. Here they are:
1) Is the dealership in the district of a congressman or woman on a key house committee? (40%)
2) Is the dealer’s owner a major contributor to the political campaign of a key congressman or woman? (30%)
3) Will our losses from keeping this dealership open be less than the congressionally imposed costs of arbitration required to shut them down? (25%)
4) Is there anything else about this dealership’s sales or other business factors that we didn’t consider when we originally decided they weren’t worth keeping around that might have gotten us to change our minds? (5%)
What I don’t understand is why the media that reported this are pretending that these factors are being weighted any other way.
Posted by Marc Hodak on March 2, 2010 under Innumeracy, Politics |
The first premise of the story is ludicrous enough: The Obama administration may require every new automobile sold in the United States to incorporate a brake override.
“We’re looking at it,” LaHood told the Senate Commerce Committee. “We think it is a good safety device.”
We? You mean the auto designers and builders in the Department of Transportation, that well-known bastion of quality manufacturing? The agency that, according to Senator Rockefeller “would rather focus on floor mats than microchips because they understand floor mats?” Those guys should be tasked with second-guessing Toyota’s engineers? Please, please, please let me wager against any of them that the net effect of their interference on this will be a net loss of highway safety, with autos all over the nation’s highways suddenly stopping as drivers maneuver to momentarily avoid something with a van riding just a little too close behind them.
Senator Rockefeller, desperately seeking to destroy far more economic value than was created by his illustrious grandfather, began with the conclusion that every legislator draws: “The U.S. government has to do a much better job of keeping the American people safe.”
Yes, the government of a nation that tolerates 35,000 auto deaths per year is gearing up its magnificent machinery to take on a problem that is alleged to have caused all of 5 deaths since 2007, and perhaps 52 deaths since 2000, with even that latter number being mere allegation provided by cowering agents whose funding depends on giving their congressional masters exactly what they want to hear. That way, our legislators can studiously ignore the fact that in the trillions of miles driven per year, the average driver is far less likely to die in a Toyota than in most any vehicle made by the auto companies they directly oversee, makers of the most unsafe vehicles in the land, according to the government’s own crash testing.
And when you thought your “You can’t be serious!” clown nose couldn’t shine any brighter, the second premise of this story–that the government may restrict Japanese-made vehicles–turns it blinding red with this from Nebraska Senator Mike Johanns:
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