Follow the RRs Example, Detroit

This is a link to a blurb from CNBC last week that's worth the four minute and 44 second length. [I hate to put anything up with a NYT ad in it, but what can you do?]

Matthew Rose, CEO of Burlington Northern Santa Fe Corp. and Lambda Chi Alpha brother, talks about the railroad industry 25 years after deregulation. There are a third fewer miles of track and the number of railroad employees fell from 500,000 to 200,000, but the trains carry 60% more freight now than they did pre-deregulation. RR restructuring targeted pricing and technology. Thirty-seven class one RR companies have consolidated into just seven today. Layoffs occurred mostly through attrition. Capital fled the industry in the face of this drastic reform but profitability has returned.

This is what the Detroit auto makers need. The American taxpayer does not need to be subsidizing a system that is no longer sustainable. The system needs to be replaced. Replaced by something beyond the imagination of the Those Now In Charge.

Someone the other day said that annual cars sales have dropped from 17 million to 10 million. I don't know if that's accurate, don't have the drive to look it up to confirm. But if it's true, all this talk about helping the Big Three out in order to "protect jobs" is a bunch of hooey. Jobs doing what--building cars that no one's buying?! If your sales are down 40%, your production lines and employee roles need to be cut by 40%. [Unless of course you are the government.]

If there are no buyers (bc. buyers no longer have lines of credit on their homes, or they can't get loans, or potential buyers don't have jobs any more), then factories very simply need to be closed. Stop building cars! Nobody--not Detroit executives, not government bailout plans--can continue to pay people to build cars if no one is buying them! This is the end of an era, just as it was the end of an era for the caboose in the early nineties.

Can it be any more simple?

Will it be a bath tub?

Interesting interview on Squawk this morn with Bill Zollars, the CEO of YRC Worldwide (that's Yellow Trucking for those of you who are not Squawk fans).

YRC is in a spot. Business is down double digits year over year. It's "significant. . . . It's very hard to find a metric that's headed in the right direction." He was on a year ago and presciently predicted this was coming. Sure enough he was right. He agrees that it may not end up being a V- or U-, but rather a bathtub-shaped bottom. Yikes.

Due to pension commitments Yellow has been forced to shift money from salaries over to pension benefits. They have more recently negotiated with the Teamsters union to reduce benefits to such an extent that the union pay and benefits package will soon be no better than the package for non-union members.

Unfortunately for so many, there may be a whole lot more of this in the coming months as American benefits adjust downward in order to be competitive in this World Economy.

THe Highwaymen

One of my favorite songs, tho, it doesn't qualify as a masterpiece.

What I would give to have been at that concert.

"I am still around, always be around, and around, and around, and around. . . "