President Obama vows not to “walk away” from struggling US carmakers. But with each passing day, it becomes ever more of a stretch to think anyone can save the Detroit auto industry.
Obama’s new unofficial car czar, Steven Rattner, needs to realize this soon – and then draw up a plan for letting the companies wind down in an orderly fashion.
“We are committed to the goal of a re-tooled, re-imagined auto industry that can compete and win,” the president said Tuesday. Sounds terrific.
But Chrysler lost nearly a million bucks an hour last year, 24/7; Ford, $1.7 million.
Shaky finances have pushed the Big Three’s suppliers to the brink; lenders are withholding credit, and many parts makers have already gone belly-up.
And, parked in the drivers’ seat is the root source of Detroit’s difficulties: the powerful United Auto Workers.
True, the companies willingly signed the contracts that are now killing them.
And labor bosses are finally admitting that carmakers can’t “sustain this level of losses and stay in business,” as UAW President Ron Gettelfinger told Ford workers while urging them to ratify new concessions.
But it’s unlikely that the UAW and its members will agree to the steep, long-term givebacks needed to make Detroit’s cars – and prices – truly competitive with those of foreign car-makers, which offer far less lucrative pay packages.
Obama’s team and lawmakers are reviewing options this week with Big Three execs. Yesterday, administration officials met with Chrysler top brass and are to huddle with GM honchos today.
The firms want another $22 billion in aid, on top of the $17.4 billion they’ve already gotten. Washington says they must prove their viability by the end of next month – or the whole deal is off.
But who’ll believe that – when Obama has already vowed to do almost anything to keep these money-losers afloat?
“Millions of jobs depend on it,” he said. “Scores of communities depend on it.”
Obviously, the failure of these firms, or even a mere slimming down of operations, would deal a new blow to an already battered economy.
But endless taxpayer bailouts are worse: After all, why would any large company avoid risky moves if it knows the government won’t let it fail?
Why would any union not demand the moon, knowing taxpayers will foot the full tab?
This is no way to run an economy.
Obama needs to wake up to it.