Monday, March 30, 2009


President B.O. knows cars!

Looking at their performance over the past decades, no one will accuse US-based automakers of great management. That said, the idea that this Administration somehow has a better handle on how to improve the auto industry is simply laughable. To much fanfare, the President announced his Auto Task Force back in February. Notably lacking from the Task Force was any real experience with the auto industry. Even the 10 senior aides who were supposed to do the heavy lifting for the Task Force were mainly comprised of “economists, professors and former Obama campaign aides.”

But their hard work paid off; they were able to assess the situation and, as a result, Obama Says Automakers Not Moving 'Fast Enough'.

“President Obama announced today that his administration will withhold additional federal aid to General Motors and Chrysler unless the ailing U.S. automakers submit acceptable restructuring plans, but he vowed that the American auto industry will not be allowed to "simply vanish."

This is an Administration that is wedded to the concept that we are just a negotiation away from the answer to any problem. GM is up against a lot of constituencies that must agree to any changes in their business relationship. These include bondholders, bankers, suppliers and, most important to the President, unions. Retirees have grown used to a very generous retirement package. Absent Bankruptcy, changes in contracts cannot be made unilaterally (at least that’s what we learned at Maryland Law, who knows what (or if) they taught at Harvard).

The President:

“"We cannot, we must not, and we will not let our auto industry simply vanish. . . . It is a pillar of our economy that has held up the dreams of millions of our people.”

Of course, this is sheer demagoguery. The auto industry in America will not disappear – for example, most of Honda’s car and truck production is already in North America. However, forcing the Big Three into production of cars that are apparently unappealing to much of the car buying public is a good way to ensure that an auto turnaround is not in the offing. Firing the head of GM (and pushing Chrysler into the arms of a Foreign producer) puts off the day of reckoning when President Obama has to explain to his labor loyalists that the good times will never come back in Detroit.

Side Note: “…saying management should be replaced if the "team that's currently in place doesn't understand the urgency of the situation and is not willing to make the tough choices and adapt to these new circumstances."

Now that could read like a Republican politician carping about the mis-(or, perhaps more accurately, lack of) management of the Federal response to the financial mess.

But no, that was then-President-elect Obama talking about the auto industry last December….and, yes, his berating someone else about not being willing to make “tough choices” made me smile too.

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