I have been hesitant to comment much on the on-going shenanigans concerning the North American car industry, because the second I file something, everything changes.
As I type, the US Congress has passed a $14 billion (US) aid package, but the US Senate is still thinking about it. Hilarious to listen to certain senators say they'd never give private enterprise welfare payments. Check their voting records though and you'll often see they're the same guys who voted to give hundreds of millions of dollars in subsidies to foreign-owned companies to set up shop - coincidentally in THEIR states.
I was the States for the past few days, and it is interesting to see the local commentary. One editorial cartoon - might have been in the Las Vegas paper; can't remember, and I forgot to clip'n'save - basically said that it's too bad the domestic car industry didn't create lousy financial products, instead of building lousy cars. Because companies like AIG, CitiBank and other financial institutions lost billions of dollars - not by creating any products, not by actually making anything, and hardly employing anyone - but just by shoving bits of paper and computer data around, dishing out mortgages to home owners at 125 percent of the value of the house so they could buy (among other things) a new car. And those companies were given billions by that same US Congress.
David Cole, chair of the Center for Automotive Research in Ann Arbor Michigan, an industry consulting firm, said the other day that the domestic car industry was "being penalized for being old", echoing what I had written in the print edition of Wheels a couple of weeks ago. You can't expect workers to screw fenders onto Chevvies for 30 years and never get a raise. But if you're just off the farm in Georgia or Tennessee and somebody offers you $15 an hour to screw fenders onto Hyundais or Volkswagens, you're going to jump at the chance - and not worry about whether you will get titanium hips when you turn 65.
(Incidentally, you may not know that David Cole's father, Ed Cole, was the engineer who developed the famed small-block Chevrolet V8 in the '50s, and rose to become president of General Motors in 1967.)
Until the US stops being the only industrialized country in the world to tie pensions and medical benefits to the company you work for, instead of making such things a responsibility of the society as a whole, there is always going to be a built-in disadvantage to any company that has been in business for more than 35 - 40 years.
It's new companies, not necessarily foreign companies, that benefit, as Southwest Airlines proves.
Anything President-elect Obama might accomplish with respect to health care (pensions aren't even on the radar screen) will come far too late to help the car industry.
If the Senate doesn't get off its high horse and dish out some support, Chrysler (for sure), GM (probably), and Ford (possibly) will go bankrupt. While this may in fact be the only way out, and lots of companies have taken advantage of that route to restructure and come back and prosper, it will deal a devastating blow not just to the companies themselves, but also to the supplier industry - which of course also supports the foreign-owned companies.
Canada will have to play its part too, although it is very hard to negotiate when the opening gambit (as is Chrysler's ) is: pay or we move all our production back to the US.
I hope cool heads will prevail, and that at least two of the three companies survive.
How?
I wish I knew.
