Editorial: Bailout Watch 455: The Forgotten Men

Robert Farago
by Robert Farago
editorial bailout watch 455 the forgotten men

In 1979, Chrysler was staring down the barrel of bankruptcy. ChryCo’s charismatic CEO stepped forward, publicly lobbying for $1.5B worth of federal loan guarantees. Lee Iacocca captured the American taxpayer’s respect and trust—to the point where the automaker’s ad folk made Lee the company’s pitchman. “If you can find a better car, buy it!” he dared. They did and they didn’t. Either way, Iacocca’s communication skills were beyond reproach. Contrast that with today’s mumbling, bumbling Motown CEOs, who’ve managed to alienate well over half of the American public, who no longer want to buy Detroit’s cars OR provide them with a second (third) chance. And no wonder. The CEOs have demonstrated an abject inability to call a spade a spade, or sell the spadework that must be done (which is largely grave digging by now). Wagoner, Nardelli and Mulally’s failure is what it is. But what about the little guy in all this? Who speaks for them?

I’m not talking about Detroit’s unionized workers or their white collar counterparts. As much as I sympathize with their plight—caught-up as they are in a poisonous corporate culture not of their own making—they are hardly a downtrodden, voiceless minority. Their Motown overlords have Washington’s ear. The fact that Chrysler and GM have scored over $50 bn in federal handouts of one sort or another (loans, retooling loans, finance company bailouts, etc.), while Ford has arranged a $9 bn line of credit, speaks for itself. Detroit’s dealers, captive finance companies and suppliers are also well represented. But what of everybody else in the American automotive industry?

I refer to the foreign nameplate automakers and their workers. Other than some gentle murmurs of encouragement, we’ve heard nothing from Toyota, Honda, Nissan, Hyundai and the rest of America’s so-called transplants re: Chrysler and GM’s federal trough snuffling. The transplants should be a force to be reckoned with; they currently account for more than half of all automotive sales within our borders. They aren’t technically bankrupt, or facing bankruptcy. Yet their tax money (like ours) must now pay for Detroit’s chronic mismanagement.

The transplants’ productivity and success, their ability to create goods and services that American consumers want at a price that makes the company a profit (in accordance with all U.S. laws and regulations), is now subsidizing Detroit’s ongoing incompetence.

Of course, it’s worse than that. This is not a general taxpayer bitch and moan thing. It’s a government using tax money to distort the will of the American consumer by propping-up a dead competitor trading thing. In a severely contracting market, no less. I know: jobs! jobs! jobs! But what about the jobs! jobs! jobs! of all the productive, hard-working non-Detroit autoworkers laboring within U.S. borders?

The current economic meltdown has forced Toyondaissan to curtail American production, cancel scheduled factory openings and lay off thousands of workers. Would those curtailments have been as severe if Chrysler and GM had been “allowed” to go belly-up? Of course not. Common sense tells us the transplants would have scooped-up a [yet] larger share of the suddenly smaller pie, supporting American jobs and American communities. There’s no getting around it: the federal bailout is taking food of the tables of American workers.

There’s plenty of room to debate the advisability of encouraging foreign nameplates to manufacture cars in the U.S., relative to, say, Detroit-based automakers. (Who’ve shown no reluctance about importing vehicles into the U.S. market.) We’ve engaged in that discussion here on TTAC many times. But where is the voice of the transplants and their workers in this debate?

Again, there are thousands of workers and dozens of communities spread throughout the U.S. who build cars for Toyota, Honda, Nissan and Hyundai. Workers who manufacture a quality product for American consumers. Workers who pay their taxes. Workers who are NOT sucking off the federal teat, either directly or indirectly. Who speaks for them? Are they not outraged by their own government’s willingness to put their jobs at risk to support a business model that’s broken beyond repair?

If they’re not, they should be. Last year, they went to bed and woke-up in a world where free and fair competition, combined with the sweat of their own brow, assured their family’s future. Now, who knows? A cabal of corrupt financiers blew a hole through U.S. banking regulations designed to protect the average wage earner from economic ruin. These insiders opened the door; the feds have come traipsing in, paving Detroit’s road to hell, forcing American autoworkers to compete against their own government.

It’s time for them to tell Washington that these enormous, unrecoverable “loans” to Chrysler and GM are a cancer on their beliefs. I understand the transplants’ desire to keep a low profile and wait for the dust to settle. But America’s traditional values are at stake. Their workers must step up and say no to Bailout Nation.

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  • Honda_Lover Honda_Lover on Mar 25, 2009
    Bloomberg reports, “Toyota, forecasting its first loss in 59 years, may ask Japan’s government for 200 billion yen ($2 billion) in loans for its credit unit as private financing has become too expensive, public broadcaster NHK reported yesterday, without naming its source.” Toyota , the world’s largest automaker, suffered a 40 percent sales drop in February. I thought Toyota Corp had billions in cash?
  • Jurisb Jurisb on Mar 26, 2009

    My heart is with you American workers. The wrinkled and blistered hands of the divine creation. My heart is with you, the jobless, yearning to feed their families. My heart is with you, the strong men of America barely keeping their tears silently to themselves, and watching the dreams of their children evaporate at an empty Christmas table. My heart is with you, the whistling winds of barren corridors and rusted carcasses of once mighty family, that made this country strong.My heart is with you, the hard toiling hands of America, the greying hair of once forging nation to the alchemy of innovation. My heart is with you, struck by the void of emptiness and apathy of inevitability. Just call my name, and I `ll be there...

  • Redapple2 Cadillac and racing. Boy those 2 go together dont they? What a joke. Up there with opening a coffee shop in NYC. EvilGM be clowning. Again.
  • Jbltg Rear bench seat does not match the front buckets. What's up?
  • Theflyersfan The two Louisville truck plants are still operating, but not sure for how much longer. I have a couple of friends who work at a manufacturing company in town that makes cooling systems for the trucks built here. And they are on pins and needles wondering if or when they get the call to not go back to work because there are no trucks being made. That's what drives me up the wall with these strikes. The auto workers still get a minimum amount of pay even while striking, but the massive support staff that builds components, staffs temp workers, runs the logistics, etc, ends up with nothing except the bare hope that the state's crippled unemployment system can help them keep afloat. In a city where shipping (UPS central hub and they almost went on strike on August 1) and heavy manufacturing (GE Appliance Park and the Ford plants) keeps tens of thousands of people employed, plus the support companies, any prolonged shutdown is a total disaster for the city as well. UAW members - you're not getting a 38% raise right away. That just doesn't happen. Start a little lower and end this. And then you can fight the good fight against the corner office staff who make millions for being in meetings all day.
  • Dusterdude The "fire them all" is looking a little less unreasonable the longer the union sticks to the totally ridiculous demands ( or maybe the members should fire theit leadership ! )
  • Thehyundaigarage Yes, Canadian market vehicles have had immobilizers mandated by transport Canada since around 2001.In the US market, some key start Toyotas and Nissans still don’t have immobilizers. The US doesn’t mandate immobilizers or daytime running lights, but they mandate TPMS, yet canada mandates both, but couldn’t care less about TPMS. You’d think we’d have universal standards in North America.