My Proposal for the Big 3

The Senate announced yesterday that the Big 3 will need to submit a proposal on how they intend to get back to profitability and why they require Government money. The deadline for submission is Dec 2nd, 2008 and hopefully this time they will fly down on regular jets instead of $20,000 private jets. Ok I digress...If I were the CEO of one of these firms I would submit this plan...

- Condense the Dealer Network:
I would cut my dealer network down by 50-60% by offering a buyout equal to their average net profit excluding marketing cost for a 5 year period of time and allow them to retain their real estate. This buyout would be to acquire their current inventory and buyout their dealership rights to sell our products at that location.

Start date would be 1/2/2009 and be completed by no later than 4/30/2009. Once the paperwork is signed we will immediately secure the inventory and ship to holding warehouses for distribution to our remaining partners. This inventory would be slashed to cost + 4% and dealers would not be able to exceed costs + 10% to sell it. We would handle all marketing for these vehicles so the remaining network would not have to incur marketing costs.

As for the labor that worked at these dealerships, I would buy them out or negotiate transfers to new dealerships. They would be bought out according this schedule:

- 6 months - 2 years of service - 6 months of pay, benefits for 1 year, Job Placement Assistance for 1 year

- 2 years 1 day - 3 years of service - 9 months of pay, benefits for 1 year, Job Placement Assistance for 1 year

- 3 years and 1 day - 5 years of service - 1 year of pay, benefits for 1 year, Job Placement Assistance for 1 year

- 5+ years of service - an additional month of pay for each year of service, benefits for 1 year , Job Placement Assistance for 1 year.

Everyone would receive options in the company with an expiration date of 5 years.

The only stipulation is they can not be re-hired by a affiliate dealership for 2 years. They can go work for a competitor but they could not work for a GM dealership for example if they were bought out from a GM dealership.

Key to making this work is everything has to be done within 120 days.

Production of new vehicles:
I would halt the production of new vehicles for 90 days and have crews work around the clock [24 hours a day x 7 days a week] to retool our facilities so the production lines can be changed to address market demand. If a island can be built in 2.5 years large enough to be seen from space with the naked eye...we can retool our manufacturing facilities in 90 days.

Then I will earmark $3 Billion Dollars to build 3 new large super facilities that have distribution, warehousing and production capabilities. One would be placed in Michigan, one in the Midwest and one in Southeast. Again around the clock building non-stop for 18 months. While this is in development, we design a on demand logistics system similar to what KIA has to avert increase in production delays which drive up costs.

This would begin 1/1/2009

Spin Offs:
I would identify strong brand lines and spin them off and retain a minority ownership within the firm [no less than 20%]. This would begin 1/2/2009 but probably take two years to execute accurately. This will reduce direct costs and expenses, however allow for the Parent company to reap the rewards of profitability. Saturn, Hummer, Lincoln, and Dodge are a few that probably can be successful as stand alone companies.

UAW
We would have to de-unionize the firm in order for us to maintain a competitive advantage or even playing field with the World. Union employees would be offered an opportunity to opt out and join the company directly, but if not, then Union employees would be replaced with non-union employees. UAW was beneficial years ago, but now it is draining the lifeblood out of the big 3. Yes there would be a ton of lawsuits, but it is what it is.

All current Retirees would be offered a lump sum one time payment to buyout their benefits. Retirees with current life threatening illnesses or potential insurability issues would be left in the plan at a reduced co-share costs, however, everyone else would be required to obtain their own benefits. We would justly compensate retirees benefit costs, however, the metrics of the business and the current global environment is no longer suitable for the company to cover all benefit costs on a life expectancy basis. No solution is going to make anyone happy, however, we want to create as close to possible a win-win situation for all parties involved.

Something has to give otherwise this would be the end of an American Heritage and a exponential increase in unemployment.