Bailout Watch 19: When Do We Want It? NOW!
According to Automotive News [AN, sub], Motown's plans to suck $50b from the public purse to retrofit 20-year-old plants to build fuel-efficient cars are "being overtaken by events." Which is, I suppose, cheerleader speak for "Detroit's automakers have screwed themselves so badly through their own incompetence that they're in danger of going belly-up before the presidential election." AN reached this conclusion thanks to the increasingly hysterical rantings of Senator Debbie Stabenow. "We need to do something now," the Michigan democrat insisted, after a "conversation with Ford Motor Co. executives at a convention breakfast." Meanwhile, even AN is willing to admit that that "something" is a bailout by any other name. "With falling vehicle sales and deteriorating credit markets, the program has become a potential financial lifeline for some automakers and suppliers." Need I mention any names?
More by Robert Farago
Comments
Join the conversation
There seems little doubt that they'll get it, and equally little doubt about the long term benefit; as in none at least in the case of GM. Kind of like pouring water into a barrel with no bottom. So all we can do is watch the show. Relative to the dismal possibilities, a moderately positive outcome would be that the Chinese, or maybe an Indian company, buys the 2.8 before the number of bailout cycles gets to double digits. I suppose the absolute best case is that Ford becomes profitable after the first cycle and thus demonstrates that GM management isn't worth further effort. But Mulally has only 3 years or so before retirement which isn't much time to flush out a rotten system.
Automakers and suppliers are almost the next few months problem. How 'bout virtually every dealer with way too much unsellable/leasable inventory? And the floor plan and other expenses? This is certain to turn into a clusterf of much bigger proportions than just Detroits small 3.
I didn't realize the good senator was so (ahem) plump.