To some extent, General Motors is caught in a political squeeze not of the automaker’s own doing. Barack Obama was elected president last week by a wide margin.
Obama is in favor of saving the automotive industry. But he is not president yet, and won’t be for more than two months. By then, analysts say it may be too late, GM is running out of cash, and may be forced to declare bankruptcy. There are those who think bankruptcy might not be all that bad, that it could give the troubled automaker time and the legal cover needed to reorganize itself.
Yet industry experts say, no way. Bankruptcy might make sense if GM were a department store chain. But it is not. If you think GM has trouble selling its cars now, imagine if customers worried the automaker might vanish. What would happen to my warranty?
Where would I get parts and service? Honda and Toyota, here we come!
Additionally, if General Motors stopped paying its bills, many of the big suppliers it depends on might also go belly up. It‘s hard to breathe without oxygen, and it‘s hard to stay in business without cash flow. Some of these suppliers also service Ford and Chrysler. Can you say, spreading industry shutdown?
Obama understands this. But -- he isn’t president yet. He doesn’t want to give the impression that he is responsible for this emergency before he can do anything about it.
He especially doesn’t want to give the appearance that he is tied to decisions President Bush will be making.
This has an eerie precedent in history. Franklin D. Roosevelt was elected President at an even worse time, during the depths of the Great Depression. The man he defeated, Herbert Hoover, wanted Roosevelt to join him in issuing decisions.
But FDR wouldn’t take the bait. He did not want to be bound by failed policies not of his own making. So he politely declined, saying something similar to what President-elect Obama is saying now: That we have one president at a time.
Trouble is, events move at a much faster pace these days. Our economy is not as bad as in 1932. But we may have less margin for error. If we lose our auto industry, it will be virtually impossible to create another. Michigan’s congressional delegation needs to realize that we are all in this together. According to the Center for Automotive Research, even a fifty percent cut in Detroit auto operations would mean a loss next year of two and a half million jobs.
This isn’t a partisan issue, this is a survival issue. Congress just appropriated $700 billion to prop up people who push paper.
You’d think they’d be willing to devote a small fraction of that to one of the remaining manufacturing sectors of our economy.
Some day, there might be another major war. If so, will we be content to have our tanks made by Toyota?
Jack should understand that threats, fear, and cheap shots at asians is not the correct approach to gain favor for the Auto package..
I support nationalization of the domestic auto industry it works on so many levels...
Posted by: Thrasher | November 13, 2008 at 07:37 PM
Country as big as USA should have their strong manufacturing sector. No huge country (of the size of a continent or subcontinent) should rely on other country to support its manufacturing needs. Two things are critical for any big country, food security and defense security. US being the third largest country with respect to population, can never remain a strong country if it relies on the Toyota or BMW to make tanks in case of war. Similarly, if we import all food from China/Mexico, we can not be secured. People need food and security. No one is talking of bailing out. Give them loan. After all, you have given $700 billion dollars for the fixing the finance sector, why not another 25 to auto-industry as loan? Finance people are basically just crunching the numbers, they are not manufacturing anything. 1 in 10 job depends on this industry. We have to be American and buy American. We have to force GM, Ford and Crysler to improve their quality and help them with health care costs. If we need to survive in this current climate, we need to think like Gandhi. We have to stop buying stuffs made in China and making Walmart rich and in turn Peoples Republic of Walmart (AKA China) rich. We have to live with one pair of shoes and two pair of clothes but buy American. Sixty one years ago, Gandhi was successful in kicking our British from India. British did not leave India because they were too weak to hold it, but it was not in their business interest as people of India were not buying clothes made in Manchester and Burmingham. Look, what happened in India in last 60 years. Indians have a strong manufacturing sector. Off course India consumes 95% of its output, but we are talking about a country over 1 Billion in population. India is not the manufactuing powerhouse like China, but at the same time it has the security of food, stability and democracy. Just 30 years ago, India used to depend on food aid from USA. Now India is in a position to export. We need to fix things here in Michigan. If federal govt. does not help us, let us help each other in Michigan. Let us press Democratic party, now that we have given them almost absolute majority, that they help the auto-manufacturing survive and thrive.
Posted by: pradip | November 14, 2008 at 10:46 AM
There is something about the argument of "can we rely on the Japanese to make our tanks" that comes off a little ridiculous to me. Just because the "big three" aren't there to do it for us, doesn't mean that there are not factories where it can be done with people working at them that know how to do it. There are a number of Japanese automobile and automobile parts plants operating here in the United States that employ a lot of US manufacturing workers and Engineers in their tech centers. If we were ever to again be in such a desperate situation where we needed to retrofit our automobile plants to produce machines of war and the Japanese companies refused to do it, what do you think we as a nation would do? I am pretty darn sure that we would just kick them out an take over the plants.
Now, I am not saying that losing the US automakers would be a good thing. Quite the contrary, it would be horrible and do far more than destroy Michigan's already failing economy. However, when people use counterintuitive arguments like "if the big three aren't there to build are tanks for us, what will we do?" I just feel like they are just trying to play the role of a demagogue.
Oh... and don't even get me started on the whole "if you are American you need to buy American" idea brought up by one of the other commenters. Just please promise me that before you put one of those "Out of a job yet? Keep buying foreign" bumper stickers on your car that you check your vin number to make sure that the car was actually made in America, not Mexico.
Posted by: Eric H. | November 14, 2008 at 03:52 PM
Lot of useful points are there. Its really keeps me updated.
http://themotoring.com
Posted by: Account Deleted | August 19, 2011 at 02:22 AM