Cassandra Watch: Daniel Howes Edition
Like the gas price spike that helped launch the current industry death spiral, nobody saw a possible D3 bankruptcy coming. Well, outside of this little corner of the internet, anyway. But with the mainstream media catching wind of what we’ve been crying in the desert for years now, a number of well-known industry analysts are coming around to the notion that America may not have three big automakers anymore. Jalopnik’s Ray Wert was ahead of the (adjusted) curve, bellying up to the TTAC line (sorta) yesterday. Today, none other than Danny Howes of the Detroit News is playing Cassandra-come-lately as merger and bankruptcy rumors take industry-watchers by storm. To be fair, Howes isn’t blind to Detroit’s sins, and his columns have been taking an increasingly alarmist tone for some time now. But until this week he’s faced the strings and arrows of outrageous fortune with brave face and stiff upper lip. No longer.
In his latest column “One Of The Big Three May Not Survive,” Howes lays down the pom-poms and faces facts: Detroit is screwed, and none of the solutions will be convenient or easy. Howes says a potential GM-Chrysler would be a “neutron bomb,” eliminating thousands of jobs to keep hard assets and cash intact. He notes that “GM needs more brands, more plants and more dealers like it needs another credit crunch.” Finally he concludes “GM’s directors aren’t keen to embrace a Chrysler deal with Cerberus because they realize the remedy for what ails GM won’t come from swallowing a competitor. It’ll come from buying enough time to survive the imminent shakeout because — and I wish I could say otherwise — one of Detroit’s Big Three may not.” Don’t worry, Danny… you’ve tried to say otherwise for long enough.
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I still think GM is doing some of this on purpose to stop the perpetual bleeding of self inflicted wounds i.e. retiree benefits, franchise laws, UAW rules, etc. They go broke, scare the gov't into changing legislation for them like eliminating franchise laws and union shop rules and eventually in the long term GM crawls back to a reasonable marketshare as a leaner, meaner corporate hunting dog. They can't continue to do business the same way as they have for 75-100 years and they know it. Going broke is the only way they can change the situation they are in. They can't move out of Michigan b/c the UAW agreements prob follow them everywhere. They can't get out from under benefit agreements. They can leave the states with union shop rules but the UAW would likely badly hobble GM at the same time in other GM plants.