SEARCH BLOG: AUTOMOBILES
I spent the better part of the afternoon watching the Senate hearing with the "Big 3" auto executives... Messrs. Mulally, Nardelli and Wagoner... plus the UAW's Ron Gettelfinger, making their case for money, while Peter Morici, a business professor at the University of Maryland, played devil's advocate for bankruptcy.
I believe it was professor Morici who pointed out that it was basically the American companies [that were hindered by our government's failure to address currency manipulation and treaty violations] versus a combination of foreign countries and their national companies that work as one.For the most part, the meeting was cordial on the surface. Rick Wagoner seemed a little uncomfortable at times in his role and got a little testy with Sen. Corker from Tennessee. Alan Mulally was a bit reluctant to divulge what he felt was "proprietary" financial information at one point, but was otherwise comfortable and cooperative. Robert Nardelli was properly humble, but very professional.
The senators had their own agendas. Sen. Dodd seemed to be an advocate for the companies although he had his obligatory pronouncements about the "bad old days" of the auto industry fighting Congress. He was not that open to the idea of bankruptcy and even praised the auto industry for paying UAW workers 95% of their normal pay when plants were shut down for extended times... a point that Sen. Corker found objectionable.
Sen. Shelby from Alabama had no problem with the idea of the American companies going bankrupt. Why loan money to those companies when only a few million jobs may be affected? After all, those companies should have known the financial network was going to require saving and should have done something about it. He didn't seem impressed by the massive restructuring and contract renegotiations with the UAW that have occurred over the past five years.
If the federal government had done the same thing over the past five years, we'd all get a huge tax break... but that's another story.Sen. Tester from Montana brought the good old farmer shtick and wondered why there hadn't been big improvements in the fuel economy of big pickup trucks. Mr. Mulally offered to provide information about the improvements. Sen. Bennett from Utah played the wise old philosopher who talked about how "patient public money" was needed now that impatient private money was in short supply... but wanted assurances that it was going to be used well and repaid.
Sen. Casey from Pennsylvania reminisced about the steel industry demise and how important it was to not let the industrial base get clobbered again... and lose all of the associated jobs. He did like the idea of pushing the green agenda.
The three executives were not very receptive to increasing the CAFE standards that were just agreed to citing the fact that they were already "stretch" objectives and based on some iffy technology implementation.
The upshot was that Sen. Dodd thought that while the money was truly needed, he didn't have much confidence that it would be available until the next session of Congress. Messrs. Nardelli and Wagoner testified that they could well run out of money by the end of the year, while Mr. Mulally said Ford might be able to handle things through 2009 unless the economy worsened significantly.
The executives made their case. The senators listened and made their personal positions known... some in support and some quite skeptical. Let's just say that I would not like to be Mr. Nardelli or Mr. Wagoner right now. Mr. Mulally has a little more flexibility because, under his leadership for just two years, Ford did a whole lot better preparation for the worst... which has arrived.
Sen. Levin from Michigan indicated earlier that the auto executives should be willing to leave the companies in exchange for the aid.
Sen. Levin has conveniently forgotten that when the federal government fails in running within budget and economic constraints... as it does frequently when legislating pet projects... that it simply prints more money... something that automobile executives cannot do. Perhaps all of those government "executives" should be willing to resign.Let's hope that other senators have more common sense. Alan Mulally at Ford, for one, has turned an impossible situation into a possible one... and that's something I'm certain the honorable senator from Michigan could not have done in his place.
CSPAN had the 4 hours of video on their site and it may still be there...
Struggling Auto IndustryToday
Auto executives from GM, Ford and Chrysler testify on the challenges facing their companies and ways to stabilize & strengthen the industry at a Senate Banking hearing. Chairman ChrisDodd (D-CT) has been a supporter of giving some of the $700 billion Federal Intervention funds to help the automobile industry.