Money to Burn?

It appears there isn't the political stomach in D.C. for bailing out the automakers. That's unfortunately because the main problem with the bailout is perceptions... not reality. The main problem with te auto biz right now is that automobiles aren't selling. Period. No one is selling cars, not Honda, Toyota, BMW, Ford, or GM. The photo above is from NYTimes.com showing cars stacked up in port because no one is buying them. If you look closely you will see Toyota Priuses (Priusi?) lined up. So, if no one is buying, what good is a bailout? In my opinion, if the gov. were going to truly "bailout" the big three, it would start buying a lot of American cars and bury them in Texas somewhere.

Don't take this wrong, though, I'm for the government bailout of the domestic 3. But it's not a "bailout". It's not even a good loan. I see it as a stay of execution or priming the pump for a merger of two.

As evidence: GM is burning about $1.15 Billion in cash per month, giving them cash through Jan. (as of end of Oct.). So, if we give them another $20 Billion (over two-thirds the proposed bailout), that gives them about a year and a half to turn it around. They believe that with this cash, they can cut enough to survive until the economy turns a corner. To do so, though, they have to cut their monthly spending. How do you cut $1.15 billion in spending per month at a mammoth like GM (or Ford, or Chrysler)? You cut staff. You cut vehicle programs. You shutter plants. Bottom line, even with the "bailout", we would be seeing a lot more bad news before we see good news.

This would seem to say that congress killing the bailout is a good thing, right? And why is this marketing guy talking about all this anyway? Well, to answer the first question, the problem is GM, Ford, and Chrysler need cash and they need it now. Whether it comes from this bailout or some other loan program, the fact is our economy (even in good times) can't absorb the loss of one or two of them. There's just too much as stake.

And here's why a marketing guy is talking about this: there is enough ill-will towards the big 3 for perceptions that they have lazy UAW workers, years of crappy quality, and its lack of innovation (whether right or wrong, those are perceptions often spouted on talk shows these days), that if they receive the bailout and then cut staff, programs and staff (which they will HAVE to do), there would be a LOT of crying "foul!" Politicians are essentially hoping, that without the bailout, the big 3 can tap into other loan programs that won't have the appearance or political stigma of taxpayers throwing money down a blackhole, as bad news continues to roll out.

Of course, here's the rub: the money that is going to end up giving the big 3 a stay of execution is going to be the money that had been allocated (and they need) for new programs. So, your neighborhood plant may not close this time, but there won't be new product in the pipeline for it in the next few years.

THAT's why the bailout is needed and the talking heads should be looking at the reality, not perceptions.

Bailing out bicycling

This weekend I was catching up on the variety of things that have made their way into the bailout package, and I found one very interesting little tidbit: Congressman Earl Blumenauer had a tax incentive for bike commuting that got included in the overall end package. This unrelated addition was presumably to get Congressman Blumenauer to vote for the overall package (which he did not end up doing).

This added provision provides a tax incentive to employers to provide bikes and cover expenses related to riding to work. This new bike commuting incentive joins incentives that employers currently have for encouraging carpooling or using public transit. This is potentially a boon for commuting by bike, as it means that now employers have an incentive to provide the facilities to bike to work.

So, what's the challenge? Awareness. There ended up being so much in this new bailout bill, that its highly unlikely that employers (particularly smaller employers) are going to know all the different aspects of the bill or take advantage of some of the cycling incentives. The best bet is for bike shops to make sure that their staff is well educated on this incentive. When individuals are shopping for bikes that they could use to run errands or use in some transportation form, then pass along the incentive information.

Building awareness of policy changes like this are often left up to the community organizers and enthusiasts, which is why I'm writing about this here, and hopefully, you'll talk to your employers about it as well.