<VV> The fall of the Chrome Colossus - NO CORVAIR

[Norman C. Witte]

Top management usually gets pretty hefty retention bonuses when a chapter 11
is filed for an automotive supplier.  This happened in the Tower Automotive
and Collins & Aikman cases, as examples.  In the Tower case the bonus pool
for senior executives ranges from $894,000 to $2,860,800 (I looked at the
actual pleadings on the SDNY Bankrupty Court's PACER database system).  We
wouldn't want these key employees who so successfully managed the company
into bankruptcy to run off, now, would we?

(I was sitting in bankruptcy court in Detroit a couple of weeks ago during a
hearing in the Collins & Aikman case waiting for Judge Rhodes to our case
(his OTHER nightmare).  I thought I heard one of the attorneys to say that
professional fees -- attorneys, accountants, investment advisors, turnaround
advisors and the like for the debtor and the unsecured creditors
committee -- were at $20 million so far.  The case was filed in May.  It
warmed my heart.)

The problem starts on the floor and runs right up to the board room.  The
mode of operating is cronyism and the problem is really a matter of
incentives.  If the incentive for employees is to produce high quality
products in an efficient and cost effective manner, you'll get cheap, high
quality goods.  If the incentive is for employees to protect their buddies
and their positions, you'll end up with lots of buddies and positions, with
product taking a back seat.

The Japanese understand that.  The odd thing is that Americans working for
Japanese companies can run an entire plant the Japanese way and do it well.
Unfortunately, we have too many people who are too deeply invested in the
wrong set of incentives for us to be able to adopt a different, healthier
set of incentives.

You can blame management or you can blame the employees but EVERYONE in the
current system has too much invested.  That's why it's likely that
eventually, EVERYONE in the enterprise will lose. Really, it's not about
blame; there's plenty of that to go around.  It's about the will to change,
and it requires the participation of management, labor, OEMs and the
manufaturers--all of the stakeholders.  Pretty tall order.

Norm Witte

> -----Original Message-----
> From: virtualvairs-bounces at corvair.org
> [mailto:virtualvairs-bounces at corvair.org]On Behalf Of
> mhicks130 at cox.net
> Sent: Saturday, September 10, 2005 9:45 AM
> To: virtualvairs at corvair.org
> Subject: Re: <VV> Interesting GM cars - NO CORVAIR
>
>
> But fortunately some white collar workers will continue to
> get 6 figures with 7 figure bonuses and insane benefits in
> spite of causing the company to go bankrupt, selling crap
> cars and making countless poor decisions.  Thank god, they
> deserve it.  Worthless blue collar greedy bastards, what do
> they do to earn their money??
>
> ------------------------------
> <snip>
>
> Unfortunately, some blue-collar workers would no longer make $80,000
> and have incredible benefits, but then, life is rough, isn't it?
>
> Bruce
>
> Bruce W. Schug
> CORSA South Carolina
> Greenville, SC
> bwschug at charter.net
>
> CORSA member since 1981
>
> '67 Monza. "67AC140"
>
>
> ------------------------------
>
>
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