Musings From The Left Coast

Not too frequently I take a trip far from my home in order to conduct some business. Though I work in an online world, I like to make the occasional journey to see tangible new things, meet people, and to get a fresh perspective on what I do. In six years of working for myself (in a home office) I’ve learned that the human contact is all-important, wherever and whenever it can be arranged. I know that
there are people online whom I will never meet, geographically separated by national borders, many time zones, and cultural barriers.

Last week’s trip was to Los Angeles, a three day visit to allow me to attend the press days for the Los Angeles Auto Show. Earlier in the year I attended a similar show in Detroit and thought it would be good to follow up that trip with another one. After all, a significant portion of my work is derived from automotive clients including aftermarket parts companies, magazines, and other businesses. Attending these types of shows allows me to keep up with a fast changing industry while stoking the media fires.

Aged Hotel, Tiny Room

My stay was in downtown Los Angeles at an aged, European-style hotel. Built a century or so ago, the room was tiny, the interior of the hotel old, and the amenities not quite average. Still, it offered to me the convenience I needed at a price that I could afford — this trip came out of my own marketing funds, I simply did not have the budget to splurge!

I had only been in California once previously, having landed and stayed in nearby Long Beach, the city immediately to L.A.’s south. Nearly five years to the day later I was back in the area, meeting with automotive professionals as opposed to the airline executives I had met with in 2003.

Scraping the Sky in L.A.

Downtown Los Angeles is going through a renaissance with tall buildings being erected and a new theatre section, L.A. Live, opening in early December — billed as Times Square West, it is expected to bring additional cultural attractions to the area.

The tall buildings were a surprise, especially considering the amount of seismic activity in the area. I learned that the U.S. Bank Tower at 73 stories (pictured) is the tallest U.S. building west of the Mississippi and after Taipei 101, the second tallest building in quake prone regions of the world. I noticed that several skyscrapers were still under construction when I walked back and forth between the hotel and the convention center, most of the tallest buildings appeared to have been erected within the past two decades.

Naturally, I decided to do a little investigating of this building phenomenon in a bid to understand how and why such tall buildings are allowed in L.A. I learned that rigid earthquake building standards were enacted following the San Fernando Valley earthquake in 1971. Those codes require buildings to withstand a temblor, allowing top floors to shift without toppling. On the other hand, many of the mid-rises and smaller buildings of an earlier era would probably collapse on themselves, just the sort of building design as my hotel!

An International Recipe

I only saw a portion of downtown L.A. while there, having no time even to venture to Santa Monica or hit other local attractions. But, I managed to do a foot tour of the area in search of a special gift for my wife (unfortunately, not found) and got a better grasp of that section of the city. In many ways downtown L.A. reminds me of Manhattan with street vendors and bodegas mixed in with fine jewelry stores, Macy’s, and other shops. One moment I felt as if I was in Mexico City, the next I was in Tokyo — a real eclectic mix of cultures.

The weather, of course, was fabulous and underscored the reason why so many people call Southern California home. The nearby Sylmar fire was 85% contained and the haze over the city was virtually gone the two full days I was there, with the sky about the brightest blue this side of the Carolinas. Warm temperatures (low 80s) and lower humidity were a delight, but the sun setting at 4:45 p.m. was a bit of a surprise especially since I didn’t leave the convention center until after 5:00 p.m. the first day.

No Stars, Just Cars

Still, compared to New York, L.A. has all of the trappings of the Big Apple (minus a decent mass transportation system) with good weather to boot. No, I’m not going to relocate to the area as housing prices and congestion are two major drags. The next time that I return I hope to take advantage of some of the local sites, perhaps venturing to Hollywood to see what all of the celebrity ogling is all about.

To my knowledge, no famous faces turned up at the auto show unlike in Detroit when presidential candidates Mitt Romney, Mike Huckabee, and John McCain made an appearance. That’s okay, because I got to drive the Honda FCX Clarity while there and take in a number of new cars and concepts which were simply dazzling.

Chapter 11? Not the End of the Road!

When talk surfaced earlier this fall that the federal government was considering putting a huge bail out package together to aid several failing companies, I immediately began to question the wisdom of this approach. After all, if private enterprise fails what role does government have in propping up a business?

Early on, I contacted one of my US Senators, Elizabeth Dole, and told her office that I was opposed to the bail out plan that was originally under consideration. Unlike our other US Senator, Richard Burr, Senator Dole later voted against the revised bail out plan which had widespread bipartisan support. Some $700 billion later, we don’t know where all of the money has gone or in what way that it has been used. We have heard stories about lavish taxpayer funded junkets for executives which took place after the bail out money was dispensed (thank you, AIG).

Today, a lot more companies have lined up with their hands out including American Express, General Motors, Chrysler, and Ford. I’ve also heard that about half of the bail out monies — $350 billion – may not be dispensed by Treasury Secretary Henry M. Paulson, Jr., as the Bush Administration prefers that the remaining funds be used per the Obama Administration’s discretion come January 20, 2009 when The One ascends to the presidency of the United States of America.

So, my question is this: if it was a matter of life and death back in September that $700 billion be given immediately to prop up failing companies, why is it that the remaining funds can be sat on for at least two more months before the next administration decides what to do with it? I can only conclude that there wasn’t an emergency in the first place.

I’ll tell you what this is all about: fear. Yes, a group of politicians tried to scare us into forking over a wad of our money a few months ago and it is that same tactic the US automakers are now using (plus select other companies). My response to their demand for taxpayer money: file for Chapter 11 bankruptcy if things are as bad as you assert. After all, you are a private enterprise – why should America be forced to fund your poorly managed companies?

Chapter 11 of the US Bankruptcy Code allows businesses to reorganize their operations while remaining open for business. On the other hand, Chapter 7 is essentially a fire sale bankruptcy, one where the assets are liquidated and the business is shut down.

Now I must tell you that the automakers are suggesting that if they file for bankruptcy, millions of jobs will be lost. Really? Are they planning to file bankruptcy under Chapter 7, not Chapter 11? If so, why?

My thinking is that the automakers are taking a page from the fear play book, painting a worst case scenario where none exists. If the automakers file for Chapter 11 bankruptcy, that’ll open up a world of possibilities for them: union contracts can be negotiated, dealership relationships terminated, contracts with suppliers reviewed, and much more. True, GM and others would escape some of their financial responsibilities but it is these same poorly negotiated contracts which has all three automakers in their current bind.

Why wouldn’t the automakers choose Chapter 11? Political pressure. Politicians whose voting base is heavily unionized want the bail out. They know that some employees will be laid off, plants closed, and tax revenue lost. Meanwhile, a bail out doesn’t cut to the heart of the issue: all three automakers desperately need to be restructured. Inject some taxpayer money into all three companies today and I guarantee it that they’ll hold their hands out again in the near future.

To my fellow Americans: fear can be a great motivator, but it can also be used to act irrationally and protect your self interests even at the expense of other people. Government solutions to any problem –whether real or trumped up – means centralized control and the gradual erosion of our freedoms and the death of free enterprise.

I don’t like how any of this is playing out and I think that most Americans, if they had all of the right information before them, would agree and let their elected officials know that propping up the free enterprise system is bad for taxpayers and businesses alike.