Mike Jackson Chairman and CEO of AutoNation, joined former Bush Administration official, Larry Lindsey - former director of the National Economic Council (2001-2002), and Assistant to the President - on CNBC squawk box to weigh in and analyse three important subjects currently affecting the United States . The three basic economic topics that are discussed are health care, the economic stimulus plan, and the current state of the U.S.economy as well as the possibility of a future economic recovery from the current level of economic activity.
As to health care, there is general agreement between Mr. Jackson and Lawrence Lindsey that the rate of inflation in health care costs is unsustainable, and that something systemic must be done to bring these costs back in line with current economic growth. Mike Jackson particularly was emphatic in that an increase in competition within the health care insurance industry would bring out the best in health care insurance efficiencies and begin to lower costs. ..." We must remove the “antitrust” exemption that the industry now enjoys, and health care insurance should be allowed to be sold witout interstate restrictions; in other words, the health insurance companies should be allowed to compete across state lines"... Mike Jackson goes on to explain "you have states like California who are near bankruptcy, but yet they demand total legislative control of health plan services provided within their state an the legislature requires many extra services to be provided which are not the normal basic preventative medicine services, but rather the more expensive cutting edge insurance extras that escalate health care insurance costs and consequently insurancce premiums. Then they complain the their insurance costs witin their state are "out of control". 'This is a great example of the states talking out of both sides of their mouths with regard to this issue. Competition on a nationalized group level must be permited in order to reduce insurance costs.'
Additionally Mr. Jackson continues that, in his view, 'companies such as AutoNation have "worked hard" for the past ten years to reduce health care costs and now the current health care bill in congress; that has passed the “House of Representatives” and has been accepted into the Senate for debate after the Thanksgiving recess; will dramatically increase health care costs not lower them.' Taxes will be increased as well.
As for the effects of the stimulus plan; both men agree that not many new jobs have been created. "Shovel ready jobs" such as civil engineering have even dropped along with housing construction as Lawrence Lindsey indicated. It seems that special interests sections in the "bureaucracy" have benefited from the stimulus money; but the overall effect on the economy as a whole, has seemed marginal at best. "They just did not get it right in its initial design", Mike Jackson contends. 'Nevertheless, I believe we are at the bottom and people are looking forward to a modest recovery. He wen on to say that a second smaller stimulus would be particularly helpful at this time. But the mechanism needs to be more targeted toward a leveraged method of stimulus.'
However it is believed that the general economy will recover but future economic growth will improve slowly. Mike Jackson indicated that 'it wont be until 2011 that the U.S. auto industry will see annual unit sales rates of "mere recession levels", but goes on to say that what was undertaken in the auto industry was not short of “phenomenal”. 'We underwent several years worth of reorganization in a “six month periods” and the reinvention of the auto industry has been performed remarkably.' But the auto industry still needs improvement in consumer accessability to credit for continued sustainable growth to be achieved.
Nevertheless - all remain positive for the U.S, economy to improve, however it is clear that the country is at a critical juncture and the government must "get it right" or tremendous damage may be caused that would supplant a restoration of the economy from this most recent catastrophic downturn.'
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Health Care
The Stimulus Plan
The U.S. Economy
Release Date: Thursday, November 19, 2009
McCain suggests Congressman Peters not “Objective Observer”; Congressman
Peters Introduces McCain to Objective Industry Experts .....
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Washington, D.C. – Congressman Gary Peters today again defended Chrysler and its workers against Senator John McCain’s latest assertion that Chrysler will soon fail, this time with the help of objective industry experts. In a letter sent yesterday to Congressman Gary Peters, whose district is home to Chrysler Group LLC Headquarters in Metro Detroit, Senator John McCain clung to the prediction he made earlier in the week that Chrysler is going to fail. In yesterday’s letter, Senator McCain suggested that any “objective observer” could not believe that Chrysler will survive. Congressman Peters today responded to Senator McCain with a hand-delivered letter illustrating that highly regarded, independent, “objective” industry experts believe Chrysler will succeed and offered to arrange a meeting with him and such experts (text of letter and quotes from independent experts below, click here to view a copy).
In his letter, Peters said, .....“You may be right in suggesting that I am not a completely objective observer when it comes to the American automobile industry. I am an unapologetic supporter of our auto companies and the millions of Americans whose livelihoods depend on their continued viability. Taking you at your word that you are interested in hearing from objective, independent observers, I would like to provide you with the names of some well known auto industry experts whose credibility and objectivity are unquestionable. I would be happy to arrange for you to meet with any of these individuals at your convenience.” ..... Congressman Peters suggested that the best venue for this meeting may be the North American International Auto Show in Detroit in January so he can see quality American made vehicles firsthand.
While serving as grand marshal of a NASCAR race in Arizona last weekend, Senator McCain said “anybody believes that Chrysler is going to survive, I'd like to meet them.” Tuesday Congressman Peters sent Senator McCain a letter accepting his offer, saying that he believes in Chrysler and would meet with him anytime discuss the future of Chrysler and the contribution the company makes to our nation’s economy, and invited him to Michigan to meet with thousands of Chrysler employees who believe in the company and are working hard toward its continued success. Senator McCain’s initial response appears to decline Congressman Peters’ invitation because he does not believe he is an “objective observer.” No word yet whether Mr. McCain will meet with objective industry experts.
The text of Congressman Peters’ latest letter to Sen. McCain, with quotes from industry experts, is below. The letter was faxed and hand delivered to John McCain’s Senate office.
Click here to view a copy of Congressman Peters’ latest letter.
Click here to view a copy of Sen. McCain’s letter to Congressman Peters.
Click here to view a copy of Congressman Peters’ initial letter.
November 19, 2009
Senator John McCain
241 Russell Senate Office Building
Washington, DC 20510
Dear Senator McCain,
Thank you for your recent letter clarifying your remarks regarding the future of Chrysler, and for your kind words regarding the people of Michigan. You may be right in suggesting that I am not a completely objective observer when it comes to the American automobile industry. I am an unapologetic supporter of our auto companies and the millions of Americans whose livelihoods depend on their continued viability. Taking you at your word that you are interested in hearing from objective, independent observers, I would like to provide you with the names of some well known auto industry experts whose credibility and objectivity are unquestionable.
Mike Jackson is the Chairman and CEO of AutoNation, the country’s largest automobile retailer. Mr. Jackson has responded positively to Chrysler’s new business plan and has expressed an interest in acquiring additional Chrysler dealerships. Earlier this month Mr. Jackson appeared on CNBC and said, “My clear assessment is (Chrysler) will (survive) … they will make it.”
John McElroy is a widely respected automotive journalist, appearing in numerous print and broadcast sources. He recently stated, “Before going into Chrysler’s media briefing yesterday I wasn’t sure if the company was really going to be able to survive. Now that I’ve seen their five-year plan I think they have a reasonable chance of making it.”
David Cole is the Chairman of the Center for Automotive Research, a nonprofit organization widely respected for its analysis and observation of the auto industry. In a recent television appearance Mr. Cole said, “[M]y own conclusion is that GM, and Chrysler/Fiat, Ford I think are going to be around for a long time.”
I would be happy to arrange for you to meet with any of these individuals at your convenience. Better yet, I would like to extend to you an invitation to attend the North American International Auto Show in Detroit on January 11th through the 15th so that you can see first hand the world class cars and trucks being offered by America’s automobile manufacturers. I extend this invitation with the utmost sincerity and with the hope that we can work together to help build a better future for our country.
Sincerely,
Gary C. Peters
Member of Congress
Mike Jackson and Mike Maroone - Always Thinking - Influential
The legendary Wayne Huizenga left joins center right Mike Jackson and far right Mike Maroone of AutoNation in accepting the award of "Visionary Dealer of Past and Present". This very special award is given by "Automotive News", in Detroit, to the outstanding "world class" dealership that demonstrates original strategic thinking and planning for the advancement of the auto industry.
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" As CEO of this public retailer for the past decade, Mike Jackson, now 60 has taken on the Detroit 3, backed a federal gasoline tax increase, and publicly scolded the automaker's captive finance companies for cutting off consumer credit."
"As AutoNation’s COO Mike Maroone helped pioneer online car and truck shopping by listing vehicles at the company’s dealerships on the internet as early as 2002. Mr. Maroone, now 55 also worked to create greater transparency in dealership sales and finance transactions."
"AutoNation now boasts 15 billion in annual revenue, 210 dealerships in 15 states and 17,000 employees. The company says it sells more vehicles online than any other retailer. And, AutoNation has become a power voice for all U.S. dealers, championing their concerns in Washington, and Detroit."
"In 2006 Mike Jackson accused Detroit of building too many vehicles and loading them with high sales incentives. Those practices were causing residual values to plunge and inventories to bulge uncontrollably. Mr. Jackson considers his view considerably prescient when General Motors and Chrysler sought a U.S. government bailout; then filed for bankruptcy protection this year".
"Last year as the debate raged over higher fuel efficiency standards, Mike Jackson urged the lawmakers to raise the gasoline tax. Fuel prices spiked to $4.00 per gallon before to $2.00 but they are rising again. Now other industry executives including Ford Motor company’s Chairman, Bill Ford, are echoing Mike Jackson's call."
"Even when the housing market was booming in 2006, Mike Jackson was warning that an overheated market would collapse and bring auto sales down with it. Many of AutoNation dealerships are in Florida and California where the housing collapse has been more pronounced".
"Before joining AutoNation Mike Jackson was CEO of Mercedes Benz USA. Mike Maroone joined AutoNation in 1997 and became COO in 1999. AutoNation had acquired his Maroone Auto group; a group pf South Florida auto dealerships."
"At AutoNation, Mike Maroone launched the “Smart Choice” finance and insurance programs, which dealerships across the country have adopted. Consumers get a computer printed menu which lists payments and finance options, eliminating pencil and paper negotiations Mike Jackson and Mike Maroone have also created the AutoNation “Pledge of Finance” transparency. The company dealerships must inform potential buyers of the finance costs up front and guarantee not to mark up wholesale interest rates by more the 3 percentage points. "
Congratulations are in order for a "job well done" to Mike Jackson and Mike Maroone of AutoNation. All look forward to continued success and though these may be difficult economic times; it is important note there are those in the U.S. business community that can guide the future of the automotive industry with rational but yet visionary strategic planning and thoughtful vision; as well as be a positive voice for overall U.S economic reinvention, revitalization and growth that is critical for the 21st century.
Joining Carl Quintanilla and Becky Quick on the CNBC set in New York, Mike Jackson Chairman and CEO of AutoNation gave an extensive analysis and frank assessment of the new Chrysler reorganization plan to be undertaken by its new owner Fiat. This plan was unveiled to the U.S. auto industry yesterday.
Months ago, at Chrysler headquarters, Mr. Jackson met with Sergio Marshionne CEO of Fiat SpA and now head of Chrysler LLC, to discuss the future of the "new" Chrysler LLC, and to go over the plans that Fiat had developed for the struggling car company. This meeting was also to help AutoNation determine the "weight and balance" it would give the Fiat and Chrysler brands within the AutoNation Store dealer groups here in the United States.
Make Jackson and Mr. Marshionne talked extensively about the new product mixes and the new Chrysler business model, as well as the new U.S. auto industry model of "demand pull" and how it will affect the narional vehicle unit distribution model that is now coming to the forefront of the U.S. distribution system now that the "old style" production push model is dead.
Mr. Jackson is impressed with the plan as he saw it unfold yesterday and as it compared to the discussions he had with Mr. Marshionne several months ago and is convinced of Sergio Marshionne that "this is a remarkable man. If anybody can succeed in turning the Chrysler company around it will be Sergio."
Nevertheless the situation was and is still serious. Consequently, AutoNation was cautiously waiting to see the unveiling of this plan to determine if Fiat had included criteria AutoNation believed necessary to allow it to move forward with capital expansion plans; and to what extent the Fiat and Chrysler brands would be included in these plans. Yesterday, the Fiat SpA unveiled their plan for Chrysler LLC and Mike Jackson concluded that this plan, if executed properly, would succeed and positive results would be achieved.
Mike Jackson and AutoNation were using for the following criteria to evaluate the viability of the plan that was unveiled. They are as follows....
· A recognition of the seriousness of the situation ?
· Was Fiat willing to intervene dramatically and immediately with existing products and not wait years for new product development within the product chain ?
· Was Sergio Marshionne truly committed as well as Fiat as a whole ?
· Was the unveiled plan "realistic" and could it withstand some economic stresses going forward ?
After a careful review Mr. Jackson is convinced that this plan "will work" and that Chrysler LLC, under the Fiat umbrella, will survive as a viable car company and eventually flourish. " Their cash burn is over and their plan will work even if everything remains the same for now "...Mike Jackson went on to say. 'In September the company broke even; so, in my opinion they will make it with this plan just on the cost structure side alone. Ultimately they will need more revenue. But, the question that needed to be answered now was that; in the worst case scenerio; if any economic disruptions occur in the next year or two; will Chrysler survive? We believe now that it will.'
Mike Jackson’s opinion is that, if properly executed, the plan unveiled yesterday will allow Fiat and Chrysler to recreate the Chrysler and Dodge names as profitable brands. This has been a significant development for AutoNation, as it had to determine whether to move forward to support the Fiat Dodge and Chrysler brands in its footprint within the United States. Now we can move forward positively. '
'The days of penny-pinching are over for Chrysler. The cash burn is over and they are now stabalized financially. Chrysler LLC has five billion in cash on hand with an additional two billion in a line of credit available to them. Nevertheless, AutoNation still views Chrysler as the riskiest situation we are currently facing. Consequently had committed to only about 3% of our portfolio to the Dodge and Chrysler brands in our existing stores. But now after what we heard yesterday, we will be increasing our positions in our existing stores and will be in an "acquisition mode" for future capital expansion as well ...Mike Jackson concluded we believe in this plan and are very supportive.
Fiat and Sergio Marshionne "know styling and brand marketing" and have been brilliant in their executions world wide. They clearly have a brand strategy for the existing Chrysler and Dodge lines. This plan will call for the splitting of Dodge between cars and trucks with the Ram being its own brand and Sergio is a master of brands. Mike Jackson goes on to say that Fiat will not walk away from Jeep. The U.S. consumer of the Jeep brand needs not to be concerned. Fiat clearly understands rugged the "body-on-frame" and solid axle advantages Jeep has in the industry.
As for AutoNation… "we get the Fiat 500 next year as a Fiat and are excited about this." The car is "adorable" and it will be an excellent first addition to our inventory …If AutoNation adds Fiat’s Alfa Romeo brand, this will be icing on the cake. But what needs to be remembered is the complement Fiat brings to Chrysler with its current car platforms, its diesel technologies, as well as other high tech engineering advancements the company has made over the last decade.
However, let us not believe for a minute that Fiat does not know that they are staring into the abyss. But, they are young and know what they are doing, and a leader like Sergio Marshionne at the helm they will have a high probability of succeeding. Nevertheless, this is a "make or break" situation for Dodge and Chrysler. It will be in the execution of this plan that will determine the success of these companies in the future.... "This is the final charge up the hill." and AutoNation will be supportive of Fiats efforts.
As to the current economic landscape under which Fiat will have to advance this plan; we are glad to admit that the U.S. auto task force did an amazing job of restructuring of the U.S. auto industry. Mike Jackson goes on to say...The structural excesses that were taken out last year has provided the U.S. with a new business model built around the consumer rather than the car manufacturers building excess inventory just to fill production capacity. As a result, the industry would then have to liquidate excess units through incentive plans that would deteriorate brands and residual unit values. This model was self destructive and unsustainable. Now we have improved cost structures with improved profitability and industry viability.
.......Consequently we are excited about our future relationship with Fiat as well as a new shared comitment with the Chrysler and Dodge brands going forward.
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