The headline today in DeanÃ¢â‚¬â„¢s blog says it all Ã¢â‚¬â€œ Ã¢â‚¬Å“RIP Detroit ThreeÃ¢â‚¬Â. It would indeed seem that the fate of certainly Chrysler LLC and probably General Motors Corp is sealed if the rejection of a $14 billion rescue plan by the U.S. Senate remains the final word in this drawn-out chapter. Both car manufacturers have publically stated that without an immediate cash infusion they could fail by the end of the year. The third member of the Detroit triumvirate Ã¢â‚¬â€œ Ford Motor Co. Ã¢â‚¬â€œ claims to have sufficient operating capital for now but is looking for a line of credit should the market continue to weaken in the new year.
For the cynical amongst us Ã¢â‚¬â€œ and who really canÃ¢â‚¬â„¢t help being cynical these days Ã¢â‚¬â€œ this seems like just another step in a well-planned dance. The sense is that President Bush will ultimately be forced to approve using funds reserved for the $700 billion Troubled Asset Relief Program (TARP) intended for Wall Street and divert some of this money to the streets of Motown.
The thing is, the public does not support a bailout Ã¢â‚¬â€œ according to a December 4th CNN poll, 60% of the public believe the automakers should be left to their own devices; and many in this group vehemently oppose any move to prop up an industry that they feel is out of touch and terribly inefficient. The fear is that this initial outlay would only be the tip of the iceberg and much more public money would be required to keep the industry afloat beyond the next two or three months this $14 billion provides.
There is certainly a Ã¢â‚¬Å“throwing good money after badÃ¢â‚¬Â vibe involved here and a large part of the population have clearly lost faith in DetroitÃ¢â‚¬â„¢s ability to manage themselves. The image of the three CEOs each emerging from their private jets in Washington while begging for a handout did not sit well with Americans and management continues to be flogged for this very public miscue. Indeed, this only adds to prevailing belief that the American manufacturers have been poorly managed, and have relied on out-dated, obsolete designs and technology for far too long.
There is also Ã¢â‚¬â€œ rightly or wrongly Ã¢â‚¬â€œ a backlash against the unions representing the workers. Much of the public resents the generous wages and extensive benefits earned in exchange for what amounts to unskilled labor and recent refusals by the union management for any further concessions has not helped their cause.
By rejecting the bill, elected officials can duck the wrath of voters opposing the public bailout. At the same time, they can be reasonably secure in believing that Bush will then take funds from other programs to keep the manufacturers going. Despite everything else that has occurred during BushÃ¢â‚¬â„¢s tenure, he does not want to be remembered as the man that killed the American auto industry.
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