All I have done over the past few weeks is watch hockey. Therefore, the content of this blog post will be more hockey (sorry to the folks expecting something different).
Anyone who is following the playoffs (the one with ice, not with hoops), knows how the Red Wings got completely hosed on a no-goal call at the end of game 3 which cost them the game. I'm going to avoid that minefield: the referee was following proper procedure, but it was still a god-awful call.
In my opinion, the big NHL news of the week concerns the Phoenix Coyotes franchise. The team owners filed for Chapter 11 bankruptcy after multiple seasons of poor teams and shoddy attendance. NHL followers are probably not terribly surprised by this development. Phoenix is one of those new-market franchises pioneered by Commissioner Gary Bettman. My dislike for Gary Bettman has been stated before along with my doubt in the southern expansion. However, the next part of the tale is where it gets interesting.
Commissioner Gary Bettman impressions: the less evil, more incompetent 20th century mustache dictator
Businessman Jim Balsillie, co-CEO of Blackberry, quickly threw in a bid for the ailing franchise. Again, those who follow the NHL will recognize this name from a few years ago when he tried to buy the faltering Nashville Predators. Balsillie's $212.5 million bid includes a clause to move the team to Ontario, Canada. This is where Balsillie and Bettman are at odds. I'm neither opposed or supportive of a new team in Ontario. Instead, this serves as another opportunity for Mr. Bettman to embarass himself and the league.
Bettman was quoted, "We don't run out on cities."
Now Mr. Bettman, you may not have run out on Ottawa, Nashville, Buffalo and Pittsburgh, but what about Hartford, Winnipeg, Minneapolis and Quebec City? Didn't the NHL run out of those cities? It might have been the right move to pull the NHL franchises out of those markets, but would this be the wrong move in Phoenix?
Now here's an idea that will rock the world: close the franchise and do a mini-contraction. Give Jim Balsillie a call in five years when the financial situation hopefully improves then give him a franchise.
Red Wings-Ducks game four tonight! Let's hope the Wings and the refs bring their A-game, for a change.
Yesterday was a busy news day. Between the fainting senior senators, forgetful Supreme Court Justices and marching bands playing some abominable song made popular by some abominable school in some abominable state south of Michigan, one news story did not get much attention.
Chrysler and Italian car maker, Fiat, announced that they had formed a new partnership. Fiat gets a 35% share of Chrysler and access to a number of Chrysler plants in the U.S. Chrysler gets someone to help them keep their heads above the water and a partner with expertise in cars that Americans love and need (i.e. fast ones and efficient ones).
Fiat also owns Alfa Romeo, Maserati and Ferrari, but as much as Americans love fast cars like...
the Maserati GranTurismo,
and the Alfa Romeo 8c, Fiat also brings cars like...
the Fiat 500 to the table.
My hope is that this partnership bears more fruit than the ill-fated DaimlerChrysler adventure. Chrysler already makes some of the best-looking cars in the U.S. and had gleaned some useful engineering ideas from the Germans. Fiat will add some Italian expertise and inspiration to the mix. At the very least, this will hopefully get the ball rolling on Chrysler's recovery and give the executives something to talk about at the next congressional testimony.
The big news this week is the potential government bail-out of the "Big Three" Detroit car manufacturers (General Motors, Ford, Chrysler). In complete opposition to my blog mantra, I don't think I take a very moderate viewpoint towards this entire debacle. I disagreed with the $700 billion bail-out dealt out for the sinking financial markets, but I will also admit that my understanding of the situation doesn't warrant me adding my voice to the din. When it comes to the Detroit automakers, I can understand the situation from living in Michigan for a long time and from the fact that understanding the financial mumbo-jumbo with AIG, Fannie Mae, Freddie Mac, etc. is impossible for the layman.
At the most basic level, the "Big Three" do not deserve a bail-out of any form. These companies having been hemorrhaging money for years and have clearly lost their ability to innovate at a competitive pace. For the past decade, these automakers have fattened themselves on truck sales while barely paying lip service to the market for fuel-efficient vehicles. For every published success of a Detroit car company, they gloated. Whenever Toyota or Honda was mentioned in a positive story, they patted themselves on the back and tried to figure out how to do it better.
I honestly doubt that a bail-out of the "Big Three" will ignite innovation or even save them from bankruptcy. In fact, if the government decides to prop-up these industrial dinosaurs, they will be stifling innovation from competitors like Toyota, Honda or even Tesla Motors. Today, many of the airlines that declared bankruptcy in the post-9/11 airline bloodletting are in better shape than they were before. Perhaps the same will happen for the "Big Three," if not, I won't shed a tear for the companies.
However, the real danger from letting these companies hit rock bottom is the effect on the massive supply infrastructure. If the "Big Three" bottom-out, then auto parts suppliers, machining shops, dealerships, mechanics, employees and pensioners will suffer. This chain of companies and people that rely on the success of the "Big Three" are not the ones responsible for a sagging industry. A government bail-out should protect the chain while the car manufacturers stumble, not the other way around.
Amidst all the noise generated over the Detroit automakers, we can easily lose sight of the fact that this economic downturn does not merely damage U.S. companies, but foreign brands as well. Toyota employs over 36,000 people in 13 facilities in the U.S. and Honda employs more than 25,000 people across 25 facilities. The recession within the automotive industry is not limited to the "Big Three," they are just being hit harder because the management has lost the ability to run a business. If Toyota or Honda fell on hard times, I somehow doubt they would get the attention that GM, Ford and Chrysler are getting.
What upsets me the most about this situation is that these stagnant car companies are going to get their money. A truly epic political lobby is fighting for the bail-out and anyone with a sane perspective can't get a word in. Governor Granholm, the United Auto Workers union and nearly every major representative of Michigan in Washington, D.C. lobbies heavily in favor of "Big Three" bailouts and limp fuel mileage restrictions. I really like Senator Carl Levin when it comes to foreign affairs and matters of state, but I wish he would shut-up when it comes to dealing with the "Big Three." Former Republican Presidential candidate Mitt Romney came into Michigan during the nomination campaign and spouted lofty rhetoric pandering to the auto companies and workers. John McCain came to Michigan and offered some of his "straight-talk" (back when he was still "straight-talking") and lost the Michigan primary by a mile. I think President-elect Obama made a mistake in inviting Governor Granholm to his provisional economic committee and he would make a huge mistake in giving her a cabinet position. In my eyes, she has done very little to improve the economy in Michigan and holds no credibility whatsoever in economic matters.
The Detroit car manufacturers and their lobby are well overdue for a rude awakening.
A few months ago, I visited the Ford Rouge plant in Detroit. The facility is really amazing. Ford has gone to great lengths to create an eco-friendly building, and, hopefully, it becomes a model for all future industrial sites. Then the great ironic tragedy of Ford appears. The Rouge plant is used to make the popular, gas-guzzling F-150 pick-up truck. Even worse, the facility was shutdown (it was not the weekend) and the tour guides said that the shutdown was on indefinite terms.
If the bail-out is inevitable, then what can be done to strong-arm the "Big Three" to innovate? Three things: strict gas mileage restrictions, purge the management and protect the aforementioned chain. Again, I want to reiterate that American-flavored innovation has rarely been done through governmental strong-arm tactics. Great American innovators like Henry Ford, Orville and Wilbur Wright, and Thomas Edison created new ideas and things without governmental interference. What would Henry Ford say if he were still around today? Hopefully, he would tell his descendant to sell the Lions to an owner that actually cared about the franchise.
