White House disses U.S. auto companies
The White House has finally spoken on the issue of giving U.S. auto companies a helping hand, and it's not great news:
"They don't need a bailout, all they need is the time to restructure and we're confident they will be very successful," said Al Hubbard, the top economic adviser to President George W. Bush.
"Obviously GM has some big challenges right now, primarily because they make automobiles that are less fuel efficient," Hubbard said.
"It is unfortunate that General Motors is going to have (layoffs) at the same time Toyota and other companies are expanding in the U.S. The important thing is that the overall economy is strong."
Press on for some commentary from the peanut gallery after the jump…
Wow. Talk about Mr. Sensitive. First of all, love GM or hate it, fuel efficiency is not a problem for the company any more than it is for Toyota in certain segments. In fact, part of GMs current marketing push is to highlight the fact that the company produces the highest number of vehicles that achieve over 30 mpg on the highway (see chart below), which is, you know, that place where Americans spend most of their time driving. Sure, GM doesnt have a halo hybrid to rally behind, but that doesnt qualify one to say that they make automobiles that are less fuel efficient. Ferrari makes vehicles that are less fuel efficient, not GM.
Even if GMs struggles could be traced back to the fact it doesnt have a hybrid, which is what we infer Mr. Hubbard
is saying, we dont see Mr. Bush trying to lessen our dependence on foreign oil at the moment, so to blame that on GM
seems a little ridiculous. Secondly, to say that the economy is strong while the American automotive industry is going
down the tubes is like hopping up and down on a sheet of ice an inch or two thick and assuming that all is well just
because at that particular moment the ice is holding. Keep it up, Mr. Hubbard, but I for one am not anxious to watch us
break through the surface.
Is this bona fide policy, or Bushs attempt to distance himself from the likes of Hillary Rodham Clinton? Regardless
of your feelings on this topic or your political affiliation, its hard not to notice what a stark contrast this makes
compared to the $15 billion in bailout money and loan guarantees offered to the airlines after
9-11.
Reader Comments (Page 1 of 2)
M1EK 10:37PM (12/18/2005)
Highway mileage is not the important figure - city mileage is, and GM placed NO cars at the top of any of the fuel economy lists at Consumer Reports, while they owned a few of the "bottom" lists.
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Mal Fuller 10:37PM (12/18/2005)
Neat, a picture of the White House that's as phony as the guy who lives there!
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number six 10:37PM (12/18/2005)
What, didn't anybody believe me when I was writing that this administration would not wave all fingers to the Big 2 and particularly the UAW, because the UAW "demands" that the rank & file vote for "the other party"?
So, now do you believe me?
The reality, sad as it is, is that GM and probably even Ford, are just one recession away from total insolvency - and that trying to bail out GM would be about like attempting to bail out the Edmund Fitzgerald - an iron ore ship which split in half and sank with all hands in the late 1970's up in Lake Superior.
Why should we taxpayers bail out GM and Ford, anyway? Never mind the UAW "demands" of the rank & file.
The British government threw away money by the "lorry load" when it nationalized British Leyland in the early 1970's, and it only delayed the inevitable.
Surely we should skip to the final chapter, and if GM and Ford survive, the fight will have made them better, stronger, more able to compete, while bailing them out will just encourage them to continue with the disasterous status-quo.
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Steve S 10:37PM (12/18/2005)
You would think that someone in that position would do a bit of research before making statements like that. As well as being a tad more articulate and selective in word choice.
GM has fuel efficent cars its just few people want to buy them.
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number six 10:37PM (12/18/2005)
OK so maybe it has nothing to do with the UAW.
Look at this. "Previous administrations" have done what plenty of governments always do - p*ss away money - lots of it went to GM so that GM would develop a "Prius" of their own.
So, did GM in their infinite wisdom, build it?
Answer - can you buy a 40 or 50 mpg mid-sized true hybrid car at any GM store? NOT.
See the link
http://www.evworld.com/blogs/index.cfm?page=blogentry&authorid=46&blogid=113
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Macmillan 10:37PM (12/18/2005)
What ever happened to the idea of having an auto summit? I remember Jim Press (Toyota) talking about one and then Bill Ford.
If something like is ever going to happen, it's not going to be done with any help from the White House apparently.
Did these executives lose their will to lead or was it just good PR to talk about the idea of a summit?
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dave 10:37PM (12/18/2005)
For a clear idea of the difference between GM and toyota, you just have to add the word "profitable" between the words "make" and "automobiles" in the white house statement.
Look at the list of GM cars you provided. How many of those are high-volume cars with decent profit margins?
GM's problem is that people don't desire their cars, and they'll only sell if they're offered at a big discount. Toyota and Honda don't have this problem.
People *do* desire their trucks, which is why they were so profitable. But now that more people can't afford to fuel them, that source of profit is gone.
Bob Lutz has been trying his darndest to change this. And despite some progress, they haven't really changed the situation the way, say, Chrysler did with the LX cars.
Really changing it is going to take more boldness and risk than GM has been capable of before. Boldness Cadillac-style, not Aztek-style.
At some point, it becomes a question of style, taste and sensibility. I've often wondered whether the big 3's location in detroit has hurt them in this respect. Given that most trends in this country emanate from the coasts, I've often wondered if the people making the decisions are too isolated from how many of us live. I know there are styling centers on the coasts, but they're not signing the checks.
Food for thought...
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Finished.Law.School 10:37PM (12/18/2005)
I don't pay my taxes to bail out companies run by and staffed by idiots. Taxpayers should not bear the cost of stupid business decisions, bad hiring and greedy unions.
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Skizzo 10:37PM (12/18/2005)
I agree with Dave about the desirable cars. The problem with US car companies is that they build shitty cars and try to sell them for the price other auto makers are selling their vehicles in the same class for.
The big 3 are all in dire need of a revamp of their product. I'm not an import car junkie, either, but have you seen the difference in build quality between something from GM, Chrysler, or Ford, and Honda, Nissan, Toyota, VW, Audi, etc? If you haven't, go out and test drive a car, or SUV from the big 3, and then from an import car manufacturer. Test drive something apples to apples - same class of automobile, and similar price (if you can find it) - you'll find the ride, interior fitment, and quality in general of the import to be better.
What's parked in my driveway? A Ford. Why? Because import manufacturers haven't started producing diesel trucks yet.
The idea that companies being in trouble and asking the US government to help them out is proposterous! If I started a company that made poor quality products compared to other companies in the same industry, preventing me from going out of business is not Uncle Sam's job, It would be my own.
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Big 10:37PM (12/18/2005)
THe funny thing is Hubbard is wrong. People care as much about fuel efficiency as they do about the environment, very little. Its GM's bland designs. When was the last time you saw a Chevy or Pontiac or Buick and said to yourself I love that car. Right now people are able find cars that they love at reasonable prices. Chevy has just put out a whole new round of bland models out which will be out for at least 3 years. Is the new Impala or Monte Carlo a nicer car than a Camry or Avalon? Too many people would buy the Toyota because someone else can save GM just like someone else can conserve energy.
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Richard Warren 10:37PM (12/18/2005)
Mal, gotta say love the comment :) :)
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Geotpf 10:37PM (12/18/2005)
Fuel efficiency (in any one class) is not GM's problem (besides the fact that they poopooed hybrids for so long that Toyota and Honda cornered the market on them). Quality is. Emphasis on large SUVs is. Obviously, large SUVs, by design, are not fuel efficent, and that is a problem. But GM's cars (for the most part) have competative mileage ratings. I say for the most part, because they don't have anything with a highway rating of greater than 35 (well, the Vibe (manual 2WD)-although I don't know why it isn't on the list above-and that's really a Toyota product anyways), while Toyota has at least five vehicles with that rating (Corolla (which gets 41 highway with a manual and 38 with an automatic), Matrix, Scion xA, Prius, and the upcoming Yaris). The fact that the small Aveo only gets 34 is pathetic. However, all that being said, they have lots of vehicles which get 30 or above (which seems to be thier corporate goal)-and a lot of them are V6s with 3.5 or 3.8 liters, which fairly is impressive.
As for the White House rescuing them, fat chance. Union members are Democrats and so is the state of Michigan. In any case, I'm not sure rescuing failing companies is the best use of taxpayer monies, although a Chrsyler style loan would be acceptable. However, that would assume there would be a plan afterwards for success of GM in the marketplace, which I don't see.
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Richard Warren 10:37PM (12/18/2005)
#7 and all the same comments could easily be applied to our politicians. You know, the best healthcare and retirement in the world but then, they don't want to share, or the quasi union of government employees. Ask yourself how many have you ever seen fired or "let go" and as to cutting costs the number of employees and costs have gone up under this administration.
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mickster 10:37PM (12/18/2005)
Lest I remind #2 that 1. "The Wreck of the Edmund Fitzgerald" was a great song written by Canadian Gordon Lightfoot; and 2. When the U.S. last bailed out a car company, it was Chrysler who eventually bought out failing AMC, took the Jeep brand and was eventually stolen away by Daimler-Benz to form Daimler-Chrysler.
With so many GM cars built outside the U.S., I for one am done with GM and even though it will damage our economy in a very big way, on this rare occasion, I will have to agree with this joke of a Whitehouse.
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John Trock 10:37PM (12/18/2005)
GM and Ford will survive....the plan is evident...declare chapter 11...get rid of the union and then stick Toyota and Honda as the high priced builders because GM and Ford will be paying $12.00 per hour with fewer benefits..just what the airlines did...it will be painful butin the longterm it will be brillant...
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Chris Meisenzahl 10:37PM (12/18/2005)
The best thing the feds could do would be to repeal the laws that force employers to deal with unions. Anything else is just window dressing or a band-aid.
Chris
http://amateureconblog.blogspot.com/
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Brian W 10:37PM (12/18/2005)
We bail out the airline business every time they cry, they were in trouble before 9-11. We give the oil companies corporate welfare. We let one part of companies file for bankruptcy while another arm is making millions. I don't think they need to bail out GM, this is just the Bush p*ssing on people who didn't vote for him.
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number six 10:37PM (12/18/2005)
Yes, mickster, I got to actually see and listen to Gordon Lightfoot doing a live concert this last summer in Interlochen, Michigan - he was great. Being from Michigan, I know about the song, of course.
I agree with you about your comments re: GM as well. I was finished with them after one of their Chevy dealers refused to honor their worthless warrantee. After 30 years of buying crap from the big 3 (and also AMC) I said "I'm done." And, I meant it.
I have a 2005 Prius now. Best car I've ever had.
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Brian W 10:37PM (12/18/2005)
#11 You don't remember what it was like before unions. If they all disappeared tomorrow, employers would start taking away pay and benefits left and right. Don't give me that companies will do the right thing crap, they've already proved they don't.
#7 I love when lawyers call unions greedy! LOL
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number six 10:37PM (12/18/2005)
GM and Ford are NOT going to survive.
I did not know about their huge debts. Now, I do.
"The handwriting is on the wall."
If you dare (brace yourselves, because it isn't just GM and Ford which are commented upon), then see
http://www.goldcentral.com/qry/backgroundstories.taf?_function=detail&NEWS_uid1=6366&_nc=df137b61172a9800a17a4062a24e8616
After reading that, how many of you peed yourselves?
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