Bailout Watch 566: Bailed Out Automakers Must Meet US Production Quotas
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!
More by Edward Niedermeyer
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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.
At what point does a government that tells a business what to produce and how, tell its citizens they must buy the product?
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.