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Detroit wants its loan money, fast

Posted by: David Welch on October 1, 2008

Detroit may have approval for its funds, but as David Kiley points out, it could be a while before the struggling car companies can actually get any cash in hand. So Detroit has fired up its lobby efforts to get the money soon. One Big Three Washington staffer tells me that the Big Three are pushing the administration to make the funds available as fast as possible. Congress mandated that the credit line should be ready in 60 days. But as the lobbyist said, “that doesn’t mean it will get done in 60 days.”

Certainly, Detroit has little stick in Washington these days. But the Big Three have some powerful people on their side, namely, Rep. John Dingell (D-Mich.) He is Chairman of the House Energy and Commerce Committee. The Michigan Democrat has made it clear that he wants the money made available soon, not in Washington time. If that doesn’t work, both Barack Obama and John McCain have backed a loan package for the auto industry. Once one of them gets in office in January, they could clear the bureaucratic bottleneck. Rest assured Detroit will be knocking on the door of the Oval Office. With sales down more than 30% for Ford and Chrysler and down 16% at General Motors, they need cash fast.

Reader Comments


October 2, 2008 12:17 PM

If there were a FDIC for the auto industry, it would have foreclosed on the Big3 this year along with IndyMac, WaMu, Wachovia, BearnStearn, etc as a precondition for the $25Bil taxpayer bailout. The first taxpayer bailout of Chrysler in the '80s looks tame in retrospect. While the US Auto industry in general remains healthy due to the foreign manufactures like Honda, Toyota, Nissan, Subaru, and BMW, the Big3 is wallowing in miserable red inks. How did the Big3 sink so low?
Look no further than years of incompetent management. After years of incestuous inbreeding, the Old-Boys- Network of the American auto industries has procreated ever more the same Freaks, Morons, and the Clue-less (FMC). High up the ranks of Clue-less is ex-Chrysler CEO Townsend, the Beancounter, who single-handedly sent Chrysler into bankruptcy by emphasizing management by bottom line rather than producing reliable cars and trucks. Judging by financial accounts, Nardelli, current Chrysler CEO, appears to be the bastard child of Townsend. The recent deposed Henry Ford Jr. exceeded Townsend's stupidity by talking-up Ford's pursuit of environmental friendly cars and trucks while knowingly manufactured monster polluters like Excursion, Expedition and Explorers with outdated, supersized OHV engines. Unfortunately for Ford's bank account, lies are rewarded by Karma. Believing that "Big Iron equals Big Profits" the brilliant minds of Wagoner, Schempf, and Ford Jr. wagered their farms and subsequently lost all when gasoline prices soared. At Ford, Ford Jr concocted a new company motto about moving "Forward" but then resurrects the retro motifs of yesteryears' cars like Mustang and the T-bird. The T-bird was a disaster worst than the LN-7. The retro-Mustang appeal turned out to be short lived as sales dried-up and Ford started moving backward. As to GM's Astek, its freaky design belies the freak in Wellburn. Lutz, the old geezer and empty nester, is preoccupied with 2-seater Solstice/Sky not realizing that the rest of America has not retired or turned empty-nesters. But for Wagoner's decision to divert precious R&D and manufacturing resources to Solstice/Sky production as well as selling the EV-1 technology to you-know-who, the Chevy Volt would have defeated Toyota's Prius and Honda's hybrid Civic years ago. By the late '60s it became apparent that The Old-Boys Network procreates and reincarnates the same FMC who in turn gave America: Corvair, Pinto, Vega, Chrysler'sK-cars, GM's B-cars, LN-7, Astek, T-Bird II, etc. The only exception to the procession of FMC out of Detroit is Lee Iocacoa, whose fresh thinking allowed the Chapter 11 reorganized Chrysler to dominate the mini-van and Jeep-SUV market for many years. While the mini-van and Jeeps were not the best engineered vehicles at the time, Iocoaca brought money and time to Chrysler. His successor squandered the opportunity and later sold Chrysler to Mercedes who also mismanaged it. The pride of corporate America, GM, Ford, and Chrysler now subsist on government hand-outs and their CEOs shamelessly beg for immediate relief. At this rate, the government will soon own GM and Ford along with AIG, Fannie Mae, Freddi Mac, investment and hedgefund papers from Lehman/BearnStearn/Merrillynch, and controlling shares of big banks. Are the FMC following the examples of the heavily government subsided Russian auto industry that produced the infamous Volga?

Trading One Monoply For Another

October 3, 2008 1:26 PM

People that hate Detroit auto makers need to keep a few very important points in mind. Why, we must ask ourselves, did Detroit fail? Because their monopoly had them skipping on quality, which the Asians then made up for in order to compete for market share. It worked beautifully, so much so that now that Detroit has got its quality up, still no one buys due to their bad memories of the past. At this point the nation as a whole has signed off on domestics to the point where they are bashed even when they do something right. For example, when JD Power gives an import a high ranking, its the truth, when it gives a domestic a high mark, it's some sort of typo or one time event. But what I think the country needs to keep in mind is that if all domestic auto makers fail, the only car makers left will be foreign, and we will have traded a domestic monopoly for a foreign one. A monopoly is a monopoly, plain and simple. What is to say that the Asians and Europeans will not then decide to skip on quality now that they do not have to compete? Many will say that that wont happen, but it has happened to every major company once it attains monopoly status. We must also keep in mind the national allegiance of the foreign automakers will be to their countries of origin and not our own. Our bombing operations killed millions upon millions of innocent Japanese and German civilians. Are we really to believe that these countries will shed tears for us if they decide to close an American plant and move operations to their own country? Would you have complete allegiance to a country that killed millions and millions of your people? I would not. We live in a very happy, fun, and sheltered country, and we tend to forget what we have done to this world. Do we really think that Chinese car makers will love the West after we colonized and looted them for such a long period? Another important fact we must consider is that a Honda factory in Ohio is not an American factory, but rather a Japanese factory located in America. The Japanese own it, the Japanese control it, and the Japanese see most of the profits. Yes they pay us a fair wage and they are to be commended for that, but how many American factories and suppliers were put out of business before that one factory was built? I am very angered at the fact that while hundreds of thousands of American auto workers were being fired no one cared where their car came from, but when foreigners build a few plants everyone starts waving a flag and announcing that their car was made here. Yes they have plants here but what they put in in no way makes up for what was taken away.

David Simmons

October 7, 2008 9:14 AM

Well, I do agree that the Big 3 management, like every other company I can think of, is incompetent and believes that they should be compensated for failure or success.
However, blaming them for building gas guzzlers at the expense of gas miserly small cars is a mistake.
All companies identify their customers wants and then hopefully build products that their customers want.
For nearly twenty years, the American public has demanded larger and more powerful trucks, sport utility vehicles, muscle cars etc..
If you want to survive as a company , you need to have a product your customer wants to buy, otherwise you will fail.
The problem all of the companies are having right now is the immediate shift in customers buying habits.
Manufacturing and designing and testing new products can not change overnight, like the customer buying habits have.
Vehicles and other products take years of development, research and testing before they can be implemented and brought to the market. EPA regualtions, safety testing, etc.. etc.. all take time and billions of dollars in today's world. The only thing these companies are guilty of is not having the foresight to see the possibility of gasoline prices dramatically changing and the economy as a whole falling apart and having a plan of action in place for just such a scenario.
Of course, Nostradamus was not available to be in charge of any of these companies.

Response to SNOZ posting

October 7, 2008 2:43 PM

I am tired of reading blogs like the one posted by SNOZ on October 2nd. Naysayers and nitpickers like him apparently can't see anything good in US made autos and have no concept of the extent US automakers support the economy. They are also blind to the extent that buying foreign cars lowers the standard of living in this country.
Our grandchildren will find fewer job opportunities at any level and will live at a lower standard of living than we do thanks to SNOZ and people like him.

prince kevwe

September 19, 2009 4:13 AM

hello friends
i am the sinour of my father son in lagos,nigeris.
and my father is dead,so my own property is to take the house,and the cars.
so i want to sell both house and cars
to free my elder sister that is in UK.
the police there aressted her that she is black,that black people are not wanted in their country.
so the amount to bay her is $8.4 us dollar.
but in nigeria money the amount is N300,000
SO so who is ready should visit my email.............

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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