"There are no rules here -- we're trying to accomplish something." -
Thomas Alva Edison
Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts
Wednesday, January 7, 2009
Tuesday, January 6, 2009
Who is asking the tough questions?
Key Democrat: No stimulus by inauguration
WASHINGTON - Congressional Democrats said Sunday that President-elect Barack Obama probably will have to wait until next month before getting the chance to sign an economic aid bill his team once hoped would be on his desk by his swearing-in Jan. 20.
“It’s going to be very difficult to get the package put together that early,” House Majority Leader Steny Hoyer of Maryland said. “But we certainly want to see this package passed through the House of Representatives no later than the end of this month, get it over to the Senate, and have it to the president before we break” in mid-February.
Obama planned to meet with Senate Majority Leader Harry Reid, D-Nev., and House Speaker Nancy Pelosi, D-Calif., on Monday to talk about enacting a massive spending plan. The president-elect also scheduled a separate meeting with the entire Democratic and Republican leadership teams.
Reid said they will do their “very very best” to get a package finished as soon as possible, but he was unwilling to set an artificial deadline for completion.
“We’re going to get it done as quickly as we can,” Reid said.
Added Hoyer: “We’re going to move as quickly as possible, given our responsibilities to make sure that we’re passing a package that will work.”
Obama said Congress should pass a plan designed to create 3 million jobs. The Democratic president-elect hasn’t announced a final price for it, but aides said the cost could be as high as $775 billion.
Congressional aides briefed on the measure say it probably would blend tax cuts of $500 to $1,000 for middle-class individuals and couples with about $200 billion to help revenue-starved states with their Medicaid programs and other operating costs. A large portion of the measure will go toward public works projects and include new programs such as research and development on energy efficiency and an expensive rebuilding of the information technology system for health care.
Senate Republican leader Mitch McConnell of Kentucky warned Democrats against trying to move quickly without the GOP’s input.
“This is an enormous bill. It could be close to a $1 trillion spending bill,” McConnell said. “Do we want to do it with essentially no hearings, no input, for example, in the Senate from Republican senators who represent half of the American population? I don’t think that’s a good idea.”
Instead of giving all that money to states as grants, McConnell suggested it go as loans.
“It will make them spend it more wisely,” McConnell said. “The states that didn’t need it at all wouldn’t take any.”
Democrats understand that the GOP has to be involved in anything they do, said Sen. Dick Durbin of Illinois, the Senate’s No. 2 Democrat.
“Mitch McConnell and Harry Reid both know that we can’t pass the economic recovery plan that this nation desperately needs without bipartisan cooperation,” Durbin said. “We’ve got to put aside a lot of the squabbling that in the past and come together under this new administration and new leadership, to get the American economy back on line.”
Hoyer said they have only two criteria for passing an economic package.
“Do it as quickly as possible, but do it right, and do it so the American people know what we’re doing, do it so that members of Congress are confident of the action that we’re taking,” Hoyer said. “So those are the two criteria — do it as quickly as possible, but do it right. I think that time frame is hopefully certainly by the end of the month.”
Hoyer spoke on “Fox News Sunday,” Reid appeared on NBC’s “Meet the Press,” while Durbin and McConnell were on “This Week” on ABC.
Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
URL: http://www.msnbc.msn.com/id/28494694/
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Big Expectations
www.chicagotribune.com/business/chi-sat-autobailoutdec20,0,4932706.story
chicagotribune.com
reporterDecember 20, 2008
Can Detroit's auto giants do in three months what has stymied them for 30 years?
That's the monumental challenge at the heart of the $17.4 billion plan from President George W. Bush's administration to prop up General Motors Corp. and Chrysler LLC long enough for them to attempt a pair of massive restructurings.
Ford Motor Co. so far doesn't need bailout funds, but the government is asking GM and Chrysler to:
•Convince holders of tens of billions in unsecured debt to swap two-thirds of their claims for equity of unknown value.
•Strong-arm the United Auto Workers into accepting work rules and wages that make them competitive with foreign rivals.
•Let the government examine their books and prove that they can be financially viable.
The moves are meant to blunt the onslaught of Toyota and Honda, which the Big Three have failed to do for decades. Experts say that will also involve shrinking dealer networks, eliminating tired brands and slashing manufacturing capacity.
"They will have to be radically transformed," said Douglas Baird, a corporate restructuring specialist at the University of Chicago Law School. "Maybe it works and let's hope it does. But can you really get all these people [to agree on anything]?"
After a long political battle over the fate of the auto companies, the Bush plan in many ways passes the crisis to the incoming Barack Obama administration.
It will extend $13.4 in emergency loans to GM and Chrysler right away in return for a pledge to meet a strict set of restructuring goals by March 31. At that point, the Obama team will have to decide if the companies have done enough to be considered viable.
If the answer is yes, they will be eligible to receive another $4 billion to fund operations. If not, they would have to pay back the original loans and fend for themselves. Until the inauguration, the effort will be overseen by Treasury Secretary Henry Paulson, who will assume the role of "car czar" contemplated in bailout legislation that failed to pass Congress earlier this month.
The rescue pits Bush against many in the Republican party and reverses his recent position. But if he didn't act, he faced the prospect of closing his presidency with the collapse of one of America's most important industries.
"Under ordinary economic circumstances … I would not favor intervening to prevent the automakers from going out of business," he said during a Friday press conference. "But these are not ordinary circumstances."
On Thursday, Bush and his spokeswoman Dana Perino hinted that the administration was giving serious thought to structuring a bailout around a so-called organized bankruptcy—an effort to forge a multiparty restructuring deal in advance of a Chapter 11 filing.
Bankruptcy experts applauded the idea, noting that a restructuring of this magnitude is almost impossible to accomplish outside the legal framework of bankruptcy court, where a judge has the ultimate power to rip up old contracts and enforce the enactment of new ones.
The auto lobby, however, argued vociferously that the taint of bankruptcy would scare off so many customers that the already teetering companies would never be able to recover. The Bush plan strikes a compromise: It uses the carrot of government funding to force the auto companies, their lenders, the UAW and countless other constituencies to strike a bankruptcy-like deal without the stigma of an actual filing.
Experts said the effort will face a thicket of difficulties.
The UAW and the auto dealers are showing no inclination to compromise. UAW President Ron Gettelfinger said the focus on labor was unfair and pledged to ask the Obama team to eliminate what many others feel are crucial provisions.
Annette Sykora, chairman of the National Automobile Dealers Association, said that while her membership understands that cuts must be made, they also demand fair compensation for individual dealers forced to close.
When asked what type of compensation dealers might settle for, Sykora hinted at the complexity the auto companies can expect. "We have close to 20,000 members, and you could get close to 20,000 answers to that question."
When it comes to restructuring the debt, the problems only multiply.
The Bush plan insists that GM and Chrysler swap two-thirds of their unsecured debt for equity. In a normal bankruptcy that might not be so difficult. But when the company is burning cash and survival is in question, the future value of the equity is a leap of faith. One bankruptcy attorney who asked not to be named said a swap leads to sticky negotiations over the rights of equity holders and what control they can exert.
"When you swap debt for equity, debt holders become owners," the attorney said. "They turn into busybodies and start making all sorts of demands."
U. of C.'s Baird notes that all of these negotiations would be easier in bankruptcy court. Rules allow a majority of bondholders to force an agreement on others. A judge can weigh dealer and labor contracts objectively and decide what makes sense for the greater good. Without that construct, success may become a test of Obama's resolve and clout.
"In these situations, motivation turns on the credibility of the threat," Baird said. "Is Obama going to hold them to it? We don't know."
mdoneal@tribune.comCopyright © 2008, Chicago Tribune
chicagotribune.com
Big expectations for autoBailout plan calls for radical changes in three months
By Michael OnealTribunereporterDecember 20, 2008
Can Detroit's auto giants do in three months what has stymied them for 30 years?
That's the monumental challenge at the heart of the $17.4 billion plan from President George W. Bush's administration to prop up General Motors Corp. and Chrysler LLC long enough for them to attempt a pair of massive restructurings.
Ford Motor Co. so far doesn't need bailout funds, but the government is asking GM and Chrysler to:
•Convince holders of tens of billions in unsecured debt to swap two-thirds of their claims for equity of unknown value.
•Strong-arm the United Auto Workers into accepting work rules and wages that make them competitive with foreign rivals.
•Let the government examine their books and prove that they can be financially viable.
The moves are meant to blunt the onslaught of Toyota and Honda, which the Big Three have failed to do for decades. Experts say that will also involve shrinking dealer networks, eliminating tired brands and slashing manufacturing capacity.
"They will have to be radically transformed," said Douglas Baird, a corporate restructuring specialist at the University of Chicago Law School. "Maybe it works and let's hope it does. But can you really get all these people [to agree on anything]?"
After a long political battle over the fate of the auto companies, the Bush plan in many ways passes the crisis to the incoming Barack Obama administration.
It will extend $13.4 in emergency loans to GM and Chrysler right away in return for a pledge to meet a strict set of restructuring goals by March 31. At that point, the Obama team will have to decide if the companies have done enough to be considered viable.
If the answer is yes, they will be eligible to receive another $4 billion to fund operations. If not, they would have to pay back the original loans and fend for themselves. Until the inauguration, the effort will be overseen by Treasury Secretary Henry Paulson, who will assume the role of "car czar" contemplated in bailout legislation that failed to pass Congress earlier this month.
The rescue pits Bush against many in the Republican party and reverses his recent position. But if he didn't act, he faced the prospect of closing his presidency with the collapse of one of America's most important industries.
"Under ordinary economic circumstances … I would not favor intervening to prevent the automakers from going out of business," he said during a Friday press conference. "But these are not ordinary circumstances."
On Thursday, Bush and his spokeswoman Dana Perino hinted that the administration was giving serious thought to structuring a bailout around a so-called organized bankruptcy—an effort to forge a multiparty restructuring deal in advance of a Chapter 11 filing.
Bankruptcy experts applauded the idea, noting that a restructuring of this magnitude is almost impossible to accomplish outside the legal framework of bankruptcy court, where a judge has the ultimate power to rip up old contracts and enforce the enactment of new ones.
The auto lobby, however, argued vociferously that the taint of bankruptcy would scare off so many customers that the already teetering companies would never be able to recover. The Bush plan strikes a compromise: It uses the carrot of government funding to force the auto companies, their lenders, the UAW and countless other constituencies to strike a bankruptcy-like deal without the stigma of an actual filing.
Experts said the effort will face a thicket of difficulties.
The UAW and the auto dealers are showing no inclination to compromise. UAW President Ron Gettelfinger said the focus on labor was unfair and pledged to ask the Obama team to eliminate what many others feel are crucial provisions.
Annette Sykora, chairman of the National Automobile Dealers Association, said that while her membership understands that cuts must be made, they also demand fair compensation for individual dealers forced to close.
When asked what type of compensation dealers might settle for, Sykora hinted at the complexity the auto companies can expect. "We have close to 20,000 members, and you could get close to 20,000 answers to that question."
When it comes to restructuring the debt, the problems only multiply.
The Bush plan insists that GM and Chrysler swap two-thirds of their unsecured debt for equity. In a normal bankruptcy that might not be so difficult. But when the company is burning cash and survival is in question, the future value of the equity is a leap of faith. One bankruptcy attorney who asked not to be named said a swap leads to sticky negotiations over the rights of equity holders and what control they can exert.
"When you swap debt for equity, debt holders become owners," the attorney said. "They turn into busybodies and start making all sorts of demands."
U. of C.'s Baird notes that all of these negotiations would be easier in bankruptcy court. Rules allow a majority of bondholders to force an agreement on others. A judge can weigh dealer and labor contracts objectively and decide what makes sense for the greater good. Without that construct, success may become a test of Obama's resolve and clout.
"In these situations, motivation turns on the credibility of the threat," Baird said. "Is Obama going to hold them to it? We don't know."
mdoneal@tribune.comCopyright © 2008, Chicago Tribune
Navigating the Next Year
Herman Trend Alert: Navigating the Next Year
December 31, 2008
A recent study by the well-respected organization The Corporate Executive Board offers some sage advice for corporate leaders about how to successfully navigate the next year.Speaking on MSNBC, Tom Monahan, Chairman and CEO of this unique peer-to-peer network, shared the results of their recent research. When asked which issues would be most challenging in 2009, 30 percent of the corporate leaders who responded answered "protecting growth initiatives", 24 percent said "making critical talent plays", 21 percent answered "exploiting risk opportunities", and 17 percent replied "improving cost discipline".Overall, the suggested strategies highlight the need for leaders to change i
n five key areas.
n five key areas. First, the report directs executives to "focus on product and services [expenditures] in their cost-cutting process, not just overhead cost, because that is where long-term competitive advantage lies".
Second, leaders must be vigilant to "protect growth initiatives ". This strategy involves identifying and sheltering growth opportunities in the capital budget. In addition, the report suggests they integrate concrete innovation targets into performance expectations and reporting, even while belt-tightening".
Third, leverage financial strengths. Foster innovations that target the shifting financial strengths of customers and suppliers.Fourth, "exploit risk opportunities: embrace, don't eradicate, "the right" risk exposures".
Finally, and in our view most importantly, now is the time to "make critical talent plays", "to court and cultivate tomorrow's winners". Take the opportunity to close critical skill gaps with less-occupied talent. Reward outstanding performance. "Use the economic crisis to sharpen the acumen of future executives." "Embrace offshore centers as a source for critical skills and next-generation executive leadership, not just low-cost execution."
The study also found that one in four top, high-performing employees expects to leave in next 12 months, up from one in 10 last year. Wise employers will use this downtime to re-engage employees with "stay interviews", re-orientation, and special projects.
This re-engagement will also reduce the five percent productivity loss that translates into about $100 Million in lost operating cash flow for the average company. Monahan closed his interview with an astute observation: "Companies playing offense on talent have a remarkable opportunity right now."********
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