November 23, 2008
AUTO MAKERS STIFFED BY CONGRESS
Federal government managers, banks and investment firms got all worked up earlier this month – rightfully so -- about the nose-diving home-building, loan, and banking economy. The U.S. Treasury Department flung $75 billion into the maw to avoid widespread panic here and abroad.
Now, other segments of the faltering economy – particularly the pivotal American automobile manufacturers -- are begging for similar help from Uncle Sam.
Foreign owned auto companies on the U.S mainland – without union contracts – are doing nicely with American workers who like their jobs.
However, General Motors, Ford and Chrysler are teetering on the edge of bankruptcy and would like some government cash to keep them afloat.
Congress and White House denizens – outgoing and incoming -- are receptive to economic hardships everywhere that teeter on the edge of a world-wide recession like that of the turbulent 1930s.
BIG THREE EXECS SPEAK OUT
Chief executives of the “Big Three” automobile factories in Michigan – impressed with the alacrity of Congress to rescue banks – hustled to Washington, D.C., in their private jets and tin cups in hand.
A public relations fiasco!
Congressional members were shocked! shocked! that beggars would arrive in their private jets to plead poverty.
Principal representative for the auto giants was Rick Wagoner of General Motors. He emphasized that auto companies could not resort to bankruptcy protection. Their customers rely on solvent companies to provide post-purchase repairs and resale.
A whiff of bankruptcy would kill an auto manufacturing company.
SENATE DENIES HELP
After two days of critical interrogation by senators, it was clear that Congress would not let the auto companies to dip into the bank bailout fund.
Senator Christopher Bond, a Missouri Republican, proposed that the automakers’ request -- for $25 billion in cash -- be diverted to federally subsidized loans already authorized to help auto companies retool for fuel-efficient environmentally friendly cars.
However, Senate Majority Leader Harry Reid objected to diverting funds for that purpose.
HOUSE ALSO UNSYMPATHIC
The automobile executives received an equally chilling reception in the House Of Representatives. Even Republicans were opposed. Speaker Nancy Pelosi strongly cautioned against an automobile “bail out.”
General Motors says it is using more than $2 billion a month in cash and may fall short in another month or so.
“Everybody is working like crazy to come up with additional cost savings. We’re going to do everything we can -- no matter what -- but the reason we’re down here now is we do think the time is urgent and the risk is high.”
Chrysler president Robert L. Nardelli said it was unlikely that his company and General Motors could survive much longer without emergency assistance.
Ford Motor chief executive, Alan R. Mulally asserted his company had enough cash to last through 2009, but a GM or Chrysler failure could have “catastrophic effects” on the industry.
A PERSONAL VIEW OF GM
Automobile manufacturing is a major business in Michigan – particularly in the corridor from Detroit north to Saginaw.
My family and kin migrated there to Flint from Missouri as their cotton fields played out and the Buick, Chevrolet, Fisher Body and A-C Spark Plug factories expanded.
Buick motorcars harken to 1893 in Flint, Michigan, where David Dunbar Buick – inventor of porcelain-clad iron bathtubs – manufactured gasoline engines for farm machinery and boats. He and his backers merged with the Flint Wagon Works in 1903 to produce Buick automobiles then in an early stage of development.
Charles Stewart Mott – a newly graduated engineer – went to work as superintendent of a Utica, New York, company making wheel and axle assemblies for the emerging automobile industry. He moved to Flint in 1905 when his company merged with the Buick Motor Company later bought by General Motors.
C.S. – as he was called by friends – was a generous man who gave extensively to scores of philanthropies.
Among them were free adult education classes, a free summer camp for poor boys (six sessions for me), the Flint Community College (my alma mater, now Mott College), medical and dental clinics, and a number of non-profit organizations that still exist today, including the Whaley Children’s Center, the Boy Scouts and the YMCA.
BACKBONE CORPORATIONS
Do Gooders today seem to think corporations are tools of the “greedy.” However, corporations are the backbone of furnishing important goods and services -- through their taxes, contributions to good causes, and creation of well paying jobs. The Big Three automakers have more than a million well-paid workers.
The bail out of government loan agencies is worthwhile, but it should be more so for corporations that pay the tax to be given away.
General Motors, Ford and Chrysler employ 720,000 people and deserve a little payback when jobs are more worthwhile than government handouts.
Henry Ford long ago had valuable advice for Congress:
"If you only do what you’re supposed to do, you haven’t done enough."
By Lindsey Wilger Williams, retired newspaper publisher and syndicated columnist
