There's one common refrain from both Detroit executives and United Auto Workers President Ronald Gettelfinger that always makes me roll my eyes up into my forehead. The nation's health-care mess, Gettelfinger told his members in a report last week, cannot be solved at the bargaining table. It needs government leadership.
Yeah, and so does world peace and solving hunger in Africa. But good luck with any of that. The UAW has never had clout with Republicans. But even Big Three executives have no stick in Washington these days, especially with the Bush Administration.
CHILLED RELATIONS. Twice now, President George W. Bush has had meetings scheduled with General Motors (GM) Chairman and CEO G. Richard Wagoner Jr., Ford Motor (F) Chairman and CEO Bill Ford Jr., and Chrysler Group CEO Tom LaSorda. Both times Bush has canceled.
Relations between the Bush Administration and Detroit have grown so frosty that some Motown executives privately say they are looking to the Democrats for help. In some cases, they are even supporting them.
Perhaps we are seeing a change of heart. Granted, Detroit political action committees have thrown money at both sides of the aisle to hedge their bets. Still, in the past two Presidential elections, top executives at all three carmakers have individually showered Bush and Republican political action committees with money.
WITH FRIENDS LIKE THESE… But there is plenty of grumbling about the Republicans in Detroit these days. And Democrats are cozying up to Motown execs. GM gave money to—among many others—Hillary Clinton's Friends of Hillary campaign fund. And Vice-Chairman Robert A. Lutz—who describes himself as very conservative—told The New York Times that he might vote for Hillary Clinton as a protest.
You can hardly blame Detroit if its execs were to bail on Bush and the Republicans. The Bush Administration has hardly served as a friend to the U.S. auto industry. When asked by reporters if the Bush Administration would consider helping GM and Detroit with their current woes, the President cavalierly said that the U.S. carmakers need to learn to compete. On one occasion, he said GM needed "to make relevant products."
That statement is almost unforgivable—at least to top executives in Detroit. Bush has blithely projected an image as a plain speakin' and tough talkin' gen-u-wine 'Merican. He reportedly drives around his Crawford (Tex.) ranch in a Ford F-250 pickup truck. Yet he doesn't mind saying U.S. carmakers should compete. That's not a Toyota pickup on his ranch.
THE YEN FACTOR. That's just the least of it. Under President Bush, working-class Americans have lost 3 million manufacturing jobs. While Bush pushes through tax cuts for wealthy people, inflation, rising energy and health-care costs, and higher interest rates are squeezing the middle class. Under Bush, average household income has declined 4% and household debt is now 120% of after-tax income—the highest level of indebtedness in history, says the Washington-based Economic Policy Institute.
All of those factors have conspired to squeeze average middle-class families—Detroit's core buyer. More-affluent folks tend to buy cars from Honda (HMC), Toyota (TMC), Mercedes-Benz, and BMW. Some Big Three marketing executives say the financial weakness of their core buyer has hurt sales.
Then there is the issue with currency. Bush has remained hands-off when it comes to long-standing Japanese manipulation of the yen. The Japanese like to weaken the yen-to-dollar exchange rate to make their exports to the U.S. cheaper and more profitable. In truth, Toyota, Honda, and Nissan (NSANY) are building more vehicles and buying more parts here all the time. Boosting the dollar against the yen just doesn't do as much as it did in the '80s.
Still, the yen has been one of Detroit's hobby horses. And the Bush Administration continues to ignore it.
REMEDIES, ANYONE? Then there's health care. Bush and the Republican-led Congress have done nothing to mitigate escalating health-care costs. It doesn't look as though they have anything in the works, either.
Detroit hasn't asked for a bailout. For that matter, I have never even heard Wagoner or Bill Ford offer up a solution. So it's unclear what they want government to do. But medical insurance and health care have clearly proven a massive burden on U.S. industry—and one that Bush and Co. has done nothing about.
All of this makes you wonder what Detroit has gotten for its long-standing support of Bush and the Republicans. From the sounds of it, auto industry leaders are starting to ask the same question.
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