Mitt Romney’s Recipe for Automaker Recovery and Success

I did not care for Mitt Romney at first. When this past election cycle began about two years ago and Romney threw his hat into the ring, I saw a wealthy, Ken Doll-type who knew what he was supposed to say and was all too happy to draw comparisons to Ronald Reagan in doing so. He came off as though he was parroting conservative talking points and, combined with his shaky record in Massachusetts, he didn’t rub me the right way.

Over the course of the primary contest, however, I saw a guy who could not escape from that wealthy perception no matter how often he ditched the suit and tie for rolled-up sleeves and a pair of jeans. I saw a guy who was frustrated at not getting the favorable press coverage that John McCain was getting. Most importantly, I saw a guy who may have started out saying what he needed to say, but who began to talk about and argue the merits of conservatism as he progressed along the campaign trail and, by the end of the contest, really began arguing those merits effectively and passionately.

By March, I liked Mitt. I was not thrilled with his intense rivalry with Mike Huckabee–a guy I really liked but felt as though may have overstayed his welcome–but I really enjoyed seeing that passion develop over the course of the campaign, perhaps because it mirrored my own growing passion. By the time he suspended his campaign at the CPAC Conference, I was firmly in his corner.

In the last few weeks of the campaign, after the economy seemed to reach its nadir and McCain botched a chance at simultaneously distinguishing himself from President Bush and showing his conservative bona fides by rejecting the $700 billion bailout, I really wondered “what if.” What if it were Romney at the top of the Republican ticket instead of McCain? How would the American public have reacted?

Romney, I believe, would have been less hesistant to call out Barack Obama for his radical associations. Romney, I believe, would have been crystal clear in placing blame for the housing crisis squarely where it belonged–on Barney Frank and the rest of those Democrats more interested in social engineering than common sense–and would have pointed out that the very people who drove Fannie Mae and Freddie Mac into the ground were among Obama’s closest financial advisers. Romney, I believe, would have been better prepared to speak directly to the American public and put the fiscally conservative solution to our economic problems in terms easy for all to understand.

I see a glimpse of the latter in this piece, which he wrote for The New York Times. He’s absolutely right, and here articulated the conservative solution better than I ever could.

Please take a look, read the piece, pass it along to your friends, and enjoy.

– Jeff

Let Detroit Go Bankrupt
By Mitt Romney, The New York Times

If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.

I love cars, American cars. I was born in Detroit, the son of an auto chief executive. In 1954, my dad, George Romney, was tapped to run American Motors when its president suddenly died. The company itself was on life support — banks were threatening to deal it a death blow. The stock collapsed. I watched Dad work to turn the company around — and years later at business school, they were still talking about it. From the lessons of that turnaround, and from my own experiences, I have several prescriptions for Detroit’s automakers.

First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

The new management must work with labor leaders to see that the enmity between labor and management comes to an end. This division is a holdover from the early years of the last century, when unions brought workers job security and better wages and benefits. But as Walter Reuther, the former head of the United Automobile Workers, said to my father, “Getting more and more pay for less and less work is a dead-end street.”

You don’t have to look far for industries with unions that went down that road. Companies in the 21st century cannot perpetuate the destructive labor relations of the 20th. This will mean a new direction for the U.A.W., profit sharing or stock grants to all employees and a change in Big Three management culture.

The need for collaboration will mean accepting sanity in salaries and perks. At American Motors, my dad cut his pay and that of his executive team, he bought stock in the company, and he went out to factories to talk to workers directly. Get rid of the planes, the executive dining rooms — all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat.

Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years. Starving research and development is like eating the seed corn.

Just as important to the future of American carmakers is the sales force. When sales are down, you don’t want to lose the only people who can get them to grow. So don’t fire the best dealers, and don’t crush them with new financial or performance demands they can’t meet.

It is not wrong to ask for government help, but the automakers should come up with a win-win proposition. I believe the federal government should invest substantially more in basic research — on new energy sources, fuel-economy technology, materials science and the like — that will ultimately benefit the automotive industry, along with many others. I believe Washington should raise energy research spending to $20 billion a year, from the $4 billion that is spent today. The research could be done at universities, at research labs and even through public-private collaboration. The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.

But don’t ask Washington to give shareholders and bondholders a free pass — they bet on management and they lost.

The American auto industry is vital to our national interest as an employer and as a hub for manufacturing. A managed bankruptcy may be the only path to the fundamental restructuring the industry needs. It would permit the companies to shed excess labor, pension and real estate costs. The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk.

In a managed bankruptcy, the federal government would propel newly competitive and viable automakers, rather than seal their fate with a bailout check.



  1. goddessdivine says:

    Bravo Mitt Romney! I have long had the impression that Romney would have been the best choice as far as the economy is concerned. His brilliant business-smarts would have proved very beneficial as leader of this country. It’s a shame that job went to the rhetoric of ‘hope and change’.

    Unfortunately people like Romney are being drowned out by the bailout community who have no idea how to run a business, let alone keep it afloat. Seriously, when do these bailouts end? I hope people take notice and actually listen to folks like Romney who know what they’re talking about.

  2. Anonymous says:

    I’m not even a republican, or not yet anyway, and I think Romney would have at least put up a good fight.
    It’s a shame.

  3. Anonymous says:

    Really points up the difference between Mitt and McCain-McCain had a nice patriotic resume but Mitt knows and can convey the subject matter. Too Bad -because of the Union ties to Obama there is almost no chance the Auto Industry will go into Bankruptcy-they will holdout for the handout after 1-20-

  4. bluewater says:

    Ahhhhhh, Sanity.

  5. Anonymous says:

    Romney didn’t get the Republican nomination because he is MORMON, and every halfway informed evangelical Christian in this country will tell you, unequivocally, that Mormonism (the Church of Jesus Christ of Latter Day Saints) is a religious CULT. Period.

    Had he been able to snag the Republican Presidential nomination, Christians would have had to choose between The Devil (Obama) and the Deep Blue Sea (Romney), WHICH WAS OUR CHOICE ANYWAY (devil Obama or liberal McCain), but, just as we overwhelming voted AGAINST Obama by voting for McCain, we would have done the same with Romney.

    Since Romney is younger than McCain (and I believe McCain’s age lost him a lot of votes), Romney could very well have been elected. At least the vote would have been closer. Most Christians would not be happy with a Mormon President-elect, BUT IT SURE BEATS HAVING THE DEVIL AS PRESIDENT!

  6. Quin says:

    This is your blog, and I have to reluctantly disagree. The same facts can be the basis of as many points as there are readers. That having been said here goes. It seems to me the what’s being over looked is the vacuum which a renegotiated labor would cause. That $2000 is going to have to be replaced by increased government spending. So the big 3 are now in the entitlement business (sigh)? Nope but they are being disadvantaged by their labor history. Who should pay that $2000? Should every federal tax payer? Should those who buy from the non-US owned? Should we just ignore it, and put them out on the street?
    I know the issue is bigger than just this point, but it needs to be said. How can we even consider an employment oligopsony with out it’s social impact?

  7. Ian Thorpe says:

    If only Mitt hadn’t put his dog on top of the car. I know Jeremy Clarkson of BBC’s petrolhead show Top Gear did something similar but with a cow. The difference is Clarkson wasn’t running for President (although a poll showed if we elected out Prime Ministers he could win.)

    Seriously though, I don’t think it is wages that are the killer for car makers. Volkswagen, BMW and Mercedes all succeed in a high labour cost, hight tax environment. What really killed our car industry in the UK was restrictive practices imposed by unions. They blocked introduction of new technology and obstructed improvements in productivity. British Leyland, towards the end, was having to employ guys to do nothing, their jobs were automated out of existence but agreements bound the company to employ people to do that job. That’s how insane it was.

    Someone needs to have the balls to say to union leaders, “would you rather lose half the jobs or all the jobs because there are no other options.”

  8. goddessdivine says:

    Huh. I’m a Mormon and do not belong to a cult. I invite you to visit for some actual facts and info regarding our religion.

  9. Anonymous says:


  10. ~Jennifer~ says:


  11. Anonymous says:

    Now let’s get Romney and Palin together so they can work together to “speak” some common sense on the economy and energy while we countdown to the next election. Mitt is smart to stay visible and outspoken…but it is Palin who has the nation’s attention. He needs to get on her popularity train. They can campaign for the next 4 years!

    Oh, and the Mormon issue might be a bonus now…since the extreme left is Mormon-bashing over the passing of Prop 8 against gay marriage. Those who voted to save traditional marriage may see Romney as someone who will keep the definition of marriage between a man and a woman.

    Now how do we get Jindal in the mix? He freakin’ rocks!

  12. Crystal F. says:

    Great post, Jeff — thanks for sharing your thoughts and allowing us to travel in your shoes .. because I think many of us took a similar trip .. and unfortunately, we have all landed at the same destination: a land of bailouts, union-controlled / failing businesses and a President-elect with no sound business background. sigh. Hopefully this country won’t go through too much suffering before we have another chance to make a better choice of nominee, and hopefully religious bigots will have learned something.

  13. Anonymous says:

    from where does this myth come that toyota, honda, and hyundai are more profitable because of lower labor costs? their manufacturing for the u.s. market is done in the u.s. using u.s. workers to reduce shipping overhead.

  14. Ben Tover says:

    I felt the same as Jeff initially about Mitt Romney. He seemed too slick, too polished, to rehearsed with a logical answer for everything. Over time I began to realize that he is the Real Deal and I was in his corner.

    On the Mormon thing, Mitt expressed it as “faith of my fathers”. If every man in your family wore a beard, you would probably feel compelled to do the same. Even though I do not agree with the Mormon theology, I would welcome a Mormon as a neighbor any day. As a group, Mormons are high on family values, possess a good honest work ethic, and take care of each other. We could do worse as we are finding out daily. Mormons a cult? So is everyone else in the eyes of outsiders, so let’s move on with that one. We have seen how under attack family values are under to those who posses them, ie the Palin family. The Romney family is as solid a family.

    I am perplexed why men and women of character are so reviled in this election cycle. And when you point out something on the other side about, say Constitutional Ineligibility, they say ‘so what’.

    This country is paying the price now. And if an unchallenged Democratic machine amnesties 14 million illegal aliens and welfares them up at taxpayer expense, we are so screwed!

    Romney/Palin ’12?

    Dear God, Watch over our Country for the next 4 years, we beseech you though we deserve You to look away!

  15. Anonymous says:

    Romney did much good here in Massachusetts but ended up getting tired of always fighting against a one party system. Whether his merits were good for the state or not the Dems always crushed his cost savings proposals. That is why with Obama Jr (Deval Patrick) as governor here, we have billions in deficit even though Mitt left office in the black. We have politicians who have never held a real job or run a company like Mitt has so they don’t understand that he speaks the truth regarding the auto industry and unions.
    Mitt in ’12

  16. Ted Park says:

    Auto industry must NOT be allowed to implode. BUT they must be forced to undertake every action and remedy available under the current set of laws and regulations FIRST. Then we can have an intelligent discussion of whether any other special arrangements need to be made. So, we are AT LEAST a year away from any credible bailout discussion.

    (OOOPS, I used that damn word “credible”.)

  17. John Galt says:

    It seems that Romney has taken Libertarian Congressman Paul’s position with respect to the bailout. Who is John Galt

    Mitt Romney agrees with Ron Paul on Auto Bailout

    November 19th, 2008 9:00 am | by Marc Gallagher | Published in Bailouts, Big Government, Economics, Free Market, Liberty, Money, Politics, Ron Paul, government spending | Comment

    For once it seems that when it comes to the auto industry bailout Ron Paul agrees with Mitt Romney, or is it the other way around? Romney said the following about the bailouts in a New York Times op-ed.

    “If General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.”

    “Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.”

    I couldn’t agree with Romney more. Paul and Romney’s reasoning may come from different sources, but the result is the same, at least on this particular bailout. I’m happy to see Romney not taking the same line of Bush Republicans, saying that the bailout is required but must not come from the $700 billion bailout money.

  18. Anonymous says:

    Mitt was for the original bailout and now he is only copying Huckabee with the auto bailout. Why is it you say Huckabee stayed in the race too long? Mitt-flip should’ve never even been in the race. His record is far more liberal than Mccain has ever been. Jeff, I think you need to educate yourself on your man Mitt-flip by the people who have been in the conservative trenches from the beginning trying to counter Mitt-flips’s liberal ways. The man changes positions as often as he changes socks.

  19. Anonymous says:

    What short memories you all have….Mitt Romney backed the $700 billion dollar financial “bailout” plan (a.k.a. TARP). He is no Fiscal Conservative!

  20. Anonymous says:

    I’m a Huck supporter and I agree with Romney on this issue. Huck was against the 700 Billion dollar bailout from the beginning. I think Romney should have stating his opposition when congress was passing the 700 Billion dollar bailout, maybe the GOP’s in Washington would have listened.

  21. Anonymous says:

    I’m Mormon and went to church with Mitt’s sister. Even took all four of my kids to a Romney rally while we were still living in Cali. He has been right from the beginning.

    The previous poster’s egregious remarks about the LDS faith being a cult is part of the reason he didn’t win the nomination. As long as people remain uneducated, or educated by those who lie about our faith, they will hesitate to vote for someone who espouses it.

  22. Anonymous says:

    Jeff…not for posting …

    I thought you might be interested in this since I know how hard you are working at Law School…and I really do know because my daughter went to Syracuse and graduated a few years ago…very lllooonnnggg..both for her and me. Really…I thought this might be interesting…

  23. Kahleeka says:

    I too had a negative opinion of Romney and didn’t vote for him in the primary. Unfortunately, I didn’t really begin to did and dig DEEP into the candidates until Hillary mentioned Bill Ayers in her debate with Obama. I didn’t believe her and when I started digging, found out she was MORE than truthful! Why that, amongst Obama playing the race card and his mysogeny turned out to be unimportant to Hillary in the long run resulted in the PUMAs switching sides. I think there was a lot of “switched” thinking this election – our media botched up big time!

  24. Anonymous says:

    This is certainly a different story than what he campaigned on while in Michigan.

    "Mr. Romney proposed increased government spending for research on advanced fuels and vehicles, aid to automakers to deal with the costs of health care and pensions for retirees, and tax cuts for most taxpayers to help them buy new cars."

    Looks like another Mitt flip.

  25. Anonymous says:

    Looks like Romney is playing follow the leader while pretending to be a leader.

    Romney said, “The federal government should also rectify the imbedded tax penalties that favor foreign carmakers.”

    I remember Huckabee talking about imbedded taxes long ago. I’d rather have the guy that was against all the bailouts in the first place and was the candidate talking about imbedded taxes hurting our manufactures during the primaries.

    Mike Huckabee knew we were headed toward financial trouble before any of the rest of his party. Many conservatives made fun of him for bringing it up and disagreed that there was a problem at all. Huckabee knew first because he listens to the people that work for a living and is actually part of the working class himself. (Don’t forget he had to take time off from campaigning for paid speaking engagements to pay his personal bills)

    Let’s stop penalizing productivity by supporting the guy that supports getting rid of the IRS and implementing the FairTax – Huckabee 2012

  26. Janet says:

    Mitt Romney 2012 with Sarah Palin VP if she can get rid of the twang (take speech lessons like Obama did and like Hillary did) and also study study study and read The New York Times, the Wall Street Journal and USA Today every day from cover to cover.

  27. Anonymous says:

    My father is retired from GM and I hate to say it but Mitt is right. One BIG problem with the auto industry is the UAW. They have contracted to share any profits but are never held responsible for any losses. GM, Ford, Chrysler should be left to sink or swim and if they sink, there is alot of real estate and assembly lines ready for an independent auto maker to use for fuel efficient cars. Is it only me, or has anyone else noticed that the fuel economy has actually gotten WORSE on cars instead of better over the last 15 yrs? Didn’t the Big 3 learn anything from the 1970′s?

  28. Anonymous says:

    "Mormons a cult? So is everyone else in the eyes of outsiders, so let's move on with that one."

    YOU can "move on with that one" but, believe it or not, there are millions of voters in this country who won't ignore the religious convictions (or lack thereof) of someone running for office. The "Moral Majority" and "Religious Right" can have enough votes in this country to put a candidate into office. Why do you think McCain got as many votes as he did?

    I agree that most Mormons have strong family values & a good work ethic; lead moral, upright lives; and that we can do much, much worse (as shown two weeks ago). That doesn't change the fact that devout Christians, when choosing a political leader, will pick the person who, by his/her actions and words, shows a reliance on God for wisdom and guidance in making the right decisions. Not Buddha, not Confucious, not Allah, but the Hebrew God of King David, Abraham and Jesus Christ.

    Whatever your own beliefs are, you don't have to agree with Christianity, but you DO have to understand that Christians will vote their beliefs in an election…and because of their sheer NUMBER, it's folly to ignore them when picking a candidate or writing a platform. Don't ever forget that this country was founded by Christians, and the Constitution of the United States was written by Christians.

    GoddessDivine & anonymous Mormon,

    I don't need to visit for facts about your religion–I already know them. But apparently YOU don't, so I would invite you to read a book on the subject ( ) or do an internet search for "Mormon cult."

    Perhaps your eyes will be opened to the truth.

    Never blindly follow what you've been told by others–everyone should examine WHAT he believes and WHY he believes it, including Christians. Only then will you truly understand what "faith" is.

  29. Anonymous says:

    Mike and Sarah would make the best team.

  30. Anonymous says:

    I just read that the Big 3 CEOs flew to Capitol Hill in their luxury jets. Oh, the irony. Let them file BANKRUPTCY and get rid of labor contracts – then maybe they can turn a profit.

  31. Anonymous says:

    Well this settles the matter.

    Romney / Palin 2012

    Romney is spot on. Perfect understanding of what we need to do as a nation. We are a day late in recognizing we missed the boat. But He and Sarah are young and will be ready to pull this nation up out of this mess when the people are ready for them.

    I really like Palin but I do not think she has the depth of understanding of the economy that Romney displayed. So he will have to head up the ticket.

    Romney / Palin 2012

  32. CMHatem says:

    “Oh yeah, well my preacher says your preacher aint a preacher at all!”

    Really, we’ve become so numbskulled that we’re letting a persons religious affiliation count more than their moral character?

    Bill Clinton was in that protestant church all the time, didn’t seem to help.

    I hate religous bigots almost as much as I hate socialist ideologs.

    Both are too willing to cling to their ignorance and agenda even if it means the greater good is lost.

    Everyone who has the audacity to complain over the next 4 years but voted other or stayed home should take notes and learn something.

    I’m not sold on Mitt. I want to like him but he often has too many positions on a given subject for my taste.

  33. Anonymous says:

    Check this out. Can we please kick these people OUT of the Republican party, or maybe just start from scratch and leave them to their own devices??? This is unreal. Not only an uninformed electorate, but our “leaders” have no clue either!!!

    Rep. Joe Knollenberg is a Republican — from Michigan, naturally enough for the auto bailout — who believes that tax money doesn’t come from taxpayers. “It’s not your money,” he tells Neil Cavuto. It belongs to Congress, and they’ll do whatever they want with it. And what they want to do is take it from taxpayers to “prop up” failing businesses instead of forcing them to become competitive.

  34. Anonymous says:

    The biggest problem facing the automakers and many of their suppliers is the union. Union workers tend to hate management because the top executive makes more in a week than a union worker makes in a year. Top executive pay for Japanese executives is around 4 times the highest paying job on the production floor. This is the business model that should be adopted in the U.S. By adopting this model, Manufacturing People would return to the corporate level and that would go a long way to restoring competition and profitability and maintaining jobs in the U.S.

    Why let corporate executives intentionally drive everything to hell and opt to outsource? For instance, just because you buy a tire with an American name on it does not mean it was made in America. Some tire companies simply stamp their name on tires that were made overseas. This is a sleight of hand, another scheme that benefits politicians and CEOs and speculators in the finance sector.

    We need to find a way to bring Manufacturing People, who have the desire to be competitive, back to the Corporate level. I would be in favor of eliminating the capital gains tax ONLY on those corporations that show productivity and profitability on products manufactured in US factories.

  35. Anonymous says:

    warning to all–avoid that massresistance website like the plaque. They are an anti-gay group and anti-mormon and its full of distortions and hate. They may be on the right side of traditional marriage and life but that doesn’t begin to make up for their lies and tactics. Always check other sources before accepting their arguments as fact. You will find many half-truths and bold-faced lies.

  36. goddessdivine says:

    Anonymous–wow. So, I should read a book written by an excommunicated member of my church who fell away and gave into the anti-Mormon rhetoric that gets spewed from hateful and ignorant folks. Nice. ‘By their fruits ye shall know them’, as stated in the Bible (you’ve read that book, right?)

    I have actually examined what I believe, which is why I am a devout member of the LDS Church. Funny, I don’t blindly follow anyone; I choose to live God’s commandments. Your remarks are insulting and typical of the real blindness that exists in our society: ignorance and intolerance. Relying on information of excommunicated members and/or Mormon bashers rather than the actual source of our doctrine is immature and frankly ridiculous. Get a clue.

    (Sorry jeff, I’m not one to Bible bash on another’s site, but I couldn’t let this one go.)

  37. i i eee says:

    Oh anonymous at 4:37, I just LOVE it when people like you start screaming cult! It’s so awesome!

    Nothing like a good old-fashioned Mormon basher yelling “cult” to make me reconsider my religion. You really got me there. SUCH a great argument. So convincing, I just might leave the Church! HA! HAHAHAHAHHAHA!

    Oh but wait. Never mind. I have a testimony of The Church of Jesus Christ of Latter-day Saints. And nothing’s going to shake that, certainly not some anonymous commenter with a huge chip on his/her shoulder. Try being a little more creative next time.

  38. Anonymous says:

    I would personally endorse the ‘spreading-the-wealth/green politic’ if the incoming liberal government would force Saudi financial endowments to US university MESA depts. to be redirected to the university material sciences (per Mitt) and energy related science depts instead. Let the financial source of islamic terrorism fund American sciences that will ultimately render jihad irrelevant in the 21st century.

    Imagine if the recent Saudi 50M endowment resulted in a headline reflecting amazing energy saving achievements instead of the mind-boggling irresponsible deception of Islamic ‘science’ and the suicidal insanity of sharia compliant finance.

    re: Saudi Prince Gives Millions to Harvard and Georgetown (reported Dec 2005)
    Harvard in biggest curriculum overhaul in 30 years

  39. Matt says:

    I am firmly convinced that Mit would have been the most likely candidate to improve the economy. It’s really odd to me that people would want someone to fix the economy that has never run a business in their life.

    I see two valid qualifications for President – military experience seeing as he will be Commander-in-Chief and business experience to help guide efficient decisions for running the government. Strong character is also a plus :)

  40. Anonymous says:

    No thanks, Jeff. Not Romney for President. Nope!

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