Bailout Watch 566: Bailed Out Automakers Must Meet US Production Quotas

Edward Niedermeyer
by Edward Niedermeyer

Well, it turns out that October sales won’t be released until tomorrow, but luckily we have a hot-and-sweaty-fresh report by the Government Accountability Office ( PDF) to keep things interesting. And we’re learning all kinds of new things about the auto bailout. To wit:

Chrysler must either manufacture 40 percent of its U.S. sales volume in the United States or its U.S. production volume must be at least 90 percent of its 2008 U.S. production volume. GM agrees to use its commercially reasonable best efforts to ensure that the volume of manufacturing conducted in the United States is consistent with at least 90 percent of the level envisioned in GM’s business plan.

Who knew? Not us! And as surprising as it is to find that GM and Chrysler face federally-mandated production quotas, we’re almost more surprised that the most the UAW (or whomever) could negotiate was 40 percent of Chrysler’s US sales volume. Especially since the UAW owns a majority stake in Chrysler. But wait, there’s more!

Edward Niedermeyer
Edward Niedermeyer

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  • J Sutherland J Sutherland on Nov 02, 2009

    The reason the UAW caved in on the 40% production rule is that they are fresh out of options since the bailout's new money came from government,not union coffers. It's a lot like thinking you have juice with your brother's loan shark-you are concerned, but if he put himself in debt, in part, to give you a paycheck-you're part of the problem. You're not going to stop a broken leg from becoming a fundamental part of the loan process.

  • Mpresley Mpresley on Nov 03, 2009

    At what point does a government that tells a business what to produce and how, tell its citizens they must buy the product?

  • Psarhjinian Psarhjinian on Nov 03, 2009
    …and offending people of nearly all political persuasions as a result. Well, yes. That's the point. If you offend one group greatly, it'll stick to you and dog you for the rest of your life. If you develop and refine a low-grade, across-the-board misery then, with luck, you can slip under the radar. If they had outright nationalized GM, kicked ass, cleaned house and so forth, they'd have far more people screaming "OMG!!1!TEH S0ZCIALISM!!11", if they did nothing they'd be accused of letting middle America go hang. So you pick the middle raod, which does nothing well but doesn't raise as much ire, either. Note: this is what's happening (and what's happened in the past) with health care in the US. Instead of a purely private system, which wouldn't cost money, or a fully public system, which would see everyone covered 100% and cut down on bureacratic nonsense, you get the mealy-mouthed, hacked-together compromise.
  • Pch101 Pch101 on Nov 03, 2009

    Chrysler can do whatever it likes. All it needs to do is to repay the money. And yet here they are with a new Government PayMaster deciding how much money bankers may be paid When the banks repay the money, they can do whatever they want. But they need to repay the money. Moral of the story: If you don't want the government telling you what to do, then don't borrow money from the government. It's not that tough to understand.