Opinion: Column
U.S. gets a lemon with GM aid
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Also by Sean Kittridge:
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Quick question: Has anyone ever really beaten a dead horse? It would probably get tedious, but I’d bet several dollars that it’s at least a little fun. The horse won’t feel a thing, and if you don’t dismantle it, there are three guys in a backroom at Hardee’s who will. So, if only for the purposes of the next 600 words, let’s assume equine assault is an enjoyable experience because we’re about to take some swings.
Money is supposed to fix problems. A well-written check can pay for braces, a new boat or the disposal of those bodies. But no matter how much money we hand to the American auto industry, they can’t right the ship. Now 21,000 factory jobs and billions of dollars later, the geniuses at GM are taking a note from John Steinbeck as they tell their Pontiac employees to think of the rabbits and close their eyes.
The move to kill off Pontiac by the end of the next year is only one part of what GM hopes will be their first good idea since the El Camino. The company, which is currently running on $15 billion worth of government loans, is hoping to offset some of that debt by offering up GM stock, or as we like to call it, Monopoly money. If it works, they’ll try the same thing with the United Auto Workers, who they also owe around $20 billion for a health care expense trust. In the end, they hope to give controlling interest in General Motors to the government, and it looks like it just might happen.
Popular culture tells us car salesmen are slimy people who can’t match their jackets to their pants and will do anything to get you behind the wheel of that slightly used car. But at this point, GM is not slightly used — it’s totaled. If the government were an experienced buyer, it would see the duct tape on the rear bumper and the $15 billion suspension system that won’t hold up for more than three months. The worst part is that we’ve just taken a test drive, and we’re already convinced we need to buy. To finish the analogy: It’s as if prom is coming up and Washington will do anything to get screwed in a red Corvette.
So, there’s a chance the good people of America might soon own controlling stock in GM. I guess it could be worse. Although I don’t own a car, it’s nice to know I might partially own a car company. Yet the government, despite the massive investment, has no interest in running GM. Instead, they’re looking to put a member on GM’s board to make sure nobody pulls a quick one on the taxpayers. Too late.
GM had their chance, and it looks like they’ll get a second one. But if the government steps in, it has to do so with a wetsuit on. This is a corporation with no idea how to function other than to hemorrhage money and kill off blue-collar jobs. I want to see the American automotive industry survive, but capitalism is cutthroat, not patient.
The real shame — beyond the obvious loss of money and jobs — is that by shutting down Pontiac, GM is shutting down a piece of American history. There was a time in this country when fuel efficiency was measured in gallons per mile and the only thing “smart” about cars was that they occasionally came with seat belts. The GTO may be the pinnacle of American machismo but it’s also the only reason your mom settled for your dad.
The auto industry dies a little more every day. That’s the horse we’ve been beating. And to tell the truth, it isn’t all that fun. Next time, let’s try to beat a dead car. By the time this is all over, horses might be our only mode of transportation.
Sean Kittridge (kittridge@wisc.edu) is a junior majoring in journalism.
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I thought it was odd that Pontiac, of all the GM brands, was getting the axe. What about GMC? Does anyone even buy those behemoth trucks anymore?
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“The auto industry dies a little more every day.”
Mostly true only for the old Detroit industry run by myoptic, spineless executives who didn’t ever stand up to union blackmail. Do you really think that the Dems will do anything about it? Isn’t the plan to stick the taxpayers with the long-term union benefit costs?
Why shouldn’t retired auto workers have to go to the same pension plan that other retireees get when their firm or pension plan goes bankrupt?
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I would have written the same thing about Ford 3 years ago, but they really seem to be on the right track now. In addition to no one buying ANY cars at the point, the problem with GM is not the workers, not the unions, and not the engineers. The problem is lack of leadership and direction. Ford found good leadership and is now run well and ready to adapt to market forces. GM, prior to government take over, would probably keep pumping out Suburbans and Hummers, regardless of demand.
Don’t give up on GM just yet. They can make nice cars, like Cadillacs and Corevettes, so now they just need a little push in the right direction.
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REMEMBER WHEN SATURN WAS GOING TO SAVE G.M.? Now they’ve killed it. But only after neutering all the revolutionary stuff that promised to, you know, actually save GM — but that threatened the rice bowls of unions and middle-management. Plus, R.I.P. Pontiac.
Posted at 1:03 pm by Glenn Reynolds http://pajamasmedia.com/instapundit/77557/
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The GMC brand caters to the commercial ‘blue collar’ industry. They offer more work focused vehicles as opposed to the Chevrolet brand.
I don’t mean to attack the article, but what exactly did it tell me that isn’t already public knowledge? Pontiac has been dying for five years. After the failure to market it as a ‘performance’ niche brand, the killing of it was inevitable. If they want to increase profits, they have to downsize their market share and why not cut what isn’t selling. Sorry, but a storied history and a few iconic models can’t move a brand right now. And yes, GM is having trouble selling vehicles in a down economy, but name another large automotive group that is flourishing.
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Larry Kudlow :
“What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they’re getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they’re getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.”
Look at the bright side, Larry. The federal government and the workers will own one of our largest and most storied industrial companies. That has never really happened before. In other words, the governmental restructuring of General Motors is a social experiment that will shortly teach us two things: Whether businesses can be managed to a profit when in the hands of bureaucrats and union officials, and whether American consumers will trust such people to stand by the products that they make. I, for one, am eager to learn the answer, because it will tell us what we should and should not do about health care.
http://tigerhawk.blogspot.com/2009/04/gm-bankruptcy-and-test-for-american.html
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“Yet the government, despite the massive investment, has no interest in running GM.”
Right. That’s what Obama said right after he talked about putting a “car czar” in the White House, told GM what kind of cars it should build, fired the CEO and decided what executives should be paid. If that doesn’t constitute running GM I don’t know what does.
“Instead, they’re looking to put a member on GM’s board to make sure nobody pulls a quick one on the taxpayers. Too late.”
GM pull a quick one on taxpayers? GM has no such power. It is government that pulled a quick one on taxpayers by forcing them to “invest” in GM. The only way to protect taxpayers is allow them to invest where they want to invest.
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“protect taxpayers”???
The taxpayers are doomed - the taxeaters are large and in charge.