Do We Need a Car Czar, Or Is That Just an Excuse?

Well, you knew this was coming, didn’t you? The WSJ reports late today that the auto companies are behind schedule in putting together their plans for financial survival. Naturally, it’s not their fault. It seems the lack of a car czar is to blame.

According to the Journal, critical negotiations with their debt holders on a debt for equity swap and talks with the unions are nowhere near any sort of conclusion. Let me rephrase that last statement. Chrysler hasn’t even started talking to its bondholders and GM (GM) just submitted a term sheet to them. As for the unions, the article says that “little progress has been reached with the UAW on cutting labor costs.” It goes on to say that the most contentious point between the unions and the companies is a lack of clarity on how to define competitiveness.

Jesus Christ! Are we back to what the “meaning of is is?” We’re talking about numbers here, guys. You figure out how many cars you can sell, what it’s going to cost you to make them, what your other costs are and come up with a figures that let you get to that point. But once that simple exercise became an exercise in politics via their bailout, the prospects for a rational solution flew out the window.

Here’s how this plays out. Obama doesn’t want these guys coming back on February 12th with their plan while he’s trying to justify the fiscal stimulus plan and TARP ll, so the lack of a czar lets him kick the can down the road. Congress and the auto industry stakeholders enablers go to bat for their interests as the whole thing starts to be reworked. Forget viability, rescue will become the watchword. All sorts of spin is going to be forthcoming about setting these companies up to provide energy independence and restructuring them for a “green” world. American jobs will be invoked as a rationale for non-economic decisions and before you can say appropriation the Congress will be at work on a new spending program. After all, when you’ve just spent close to a trillion dollars this solution is going to be pocket change.

There was a slim chance a couple of months ago that a free market solution might have been invoked. A Chapter 11 filing would have worked with the government providing the necessary financing. It was probably always a chimera and the executives and union leaders knew so. That option no longer exists. The issue is now political and political it will stay.

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Comments

[Nick Waddell:]

Throwing bad money after good

Feb 06 12:09 PM

[Rafael Grillo:]

For as long as the promise is Government money is lurking, everyone will want a share of it, and by definition, the endless discussion will be about who gets the biggest share (Companies, UAW, etc.). We need to face reality: Chrysler is a failed enterprise, GM is a dinosaur with too many commitments to succeed and Ford seems to be the only company that seems to be scoring enough points to get a chance at long-term sustainability. No bailout package will change that. Let's save the taxpayers dollars for taxpayers business and let's enforce the orderly liquidation of Chrysler and the downsizing of GM. The politicians would spend their time more wisely developing a special Car Industry Re-sizing Bill in order to achieve that (if Chapter 11 is not appropriate enough for whatever reason) than continue discussing throwing good money after bad.

Feb 06 12:26 PM

[americafirst:]

O'Bama has no clue? Were you asleep the 8 previous years??? The only politco that talks any sense is Ron Paul. The auto industry is just a victim of the failed economic policies of the last 28 years.

Feb 06 01:11 PM

[Don Camillo:]

The czar has been the only political leader that was executed together with his entire family. I am not aware of anyone else who has been held accountable so brutally for the results of his policies.

I am not surprised that nobody wants to volunteer for this type of job description. My prayers will be with the poor guy they will appoint. And his family.

Feb 06 03:58 PM

[PastTense:]

Government bailouts won't last forever. I agree there will be another bailout bill, but the money will run out on that one too. So the question is what will happen then? I think there will be a rebellion against further bailouts.

Feb 06 10:02 PM

[Deweyp:]

I can promise you one thing Tom, GM and Chrysler know exactly what is needed and a lot more than WSJ or you. Get off the Ch11 thing already. That was last years news.

Feb 07 08:48 AM

[notsosmart:]

make the drug czar the car czar.LOL

Feb 07 10:06 AM

[Paul Killinger:]

The simple answer is no one wants a car czar. Not the automakers, their unions, and least of all their patrons in Washington. (Note also the only applicants being floated for the job are hedge fund / attorney types who know nothing about manufacturing. Can you say Cerberus?)

Were they to name someone like former GE CEO Jack Welsh, who has the brains, expertise and experience to do the job, he'd most likely give them answers they don't want to hear. Like restructuring their leadership, cutting back the UAW, and telling the Congress they're throwing the public's money away by trying to build electric cars. Not to mention the "B" word, which is where this is all destined to end up in any event.

Feb 07 10:11 AM

[Paul Killinger:]

But I'll agree that long term Ford is very likely to end up as the new GM, and our only plausible threat to the Asian automakers. It's too early to invest in that possibility, however. Besides, they may ultimately end up as a state (ie. federally) owned enterprise, quite possibly responsible for operating some vestiges of GM and Chrysler.

Feb 07 10:25 AM

[woodsey:]

Woodsey says, "Let me get my hip boots."

Feb 07 11:36 AM

[Teutonic Kn...:]

To put it mildly, I think the "Car Czar: thing is just another fantasy of our Congress.

To begin with, if such a brilliant auto executive with the resume commensurate with the job description (yet to be written by our Congress, I suppose) had existed, America wouldn't have let the Big3 drift to such a sorrowful state.

The successful candidate would literally have to be omnipresent, all-knowing, and all powerful to rein in the executive crocodiles and the unions, while at the same time grovelling up to Congress (where most members have no technical and managerial knowledge about making cars, let alone engineering a turn-around at death bed).

For the foregoing reasons I elucidated above, I respectfully submit to the reader and the author to forgo a GM-turned General Hospital Soap Opera.

Feb 07 10:53 PM