Monday, March 30, 2009

Key word now for GM, Chrysler is "If"

Barely a day into Detroit-the-day-after, it is clear the most important word in the English language for General Motors and Chrysler is "if." Yes, they have viable futures if the United Auto Workers is willing to do what it has heretofore never agreed to do - Accept competitive wage and benefit levels that will allow GM and Chrysler (and Ford?) to take on foreign rivals on a playing field that is, finally, somewhat close to being level.

This passage from The Wall Street Journal's report on President Barack Obama's announcement this morning captures the iffy nature of what is going on now in Washington, D.C and Detroit:

"'We cannot, we must not, and we will not let our auto industry simply vanish,' President Obama said at the White House.

"'What we are asking is difficult,' he said. 'It will require hard choices by companies. It will require unions and workers who have already made painful concessions to make even more. It will require creditors to recognize that they cannot hold out for the prospect of endless government bailouts.'

"The remarks came a day after the administration ousted GM Chief Executive Rick Wagoner and rejected the restructuring plans that GM and Chrysler had hoped would lead to another infusion of government cash. Instead, the White House is giving GM 60 days to come up with a strategy for viability.

"Chrysler has a month to wrap up a partnership with Italy's Fiat. Under the revised terms of a proposed alliance between Chrysler and Fiat, the Italian company would take an initial 20% stake in the U.S. auto maker, down from a 35% stake under its January pact, a person familiar with the transaction said Monday."

If the UAW doesn't go along, the Obama plan is doomed. For more details on what the Obama plan entails and what would be the result if it succeeds, read the rest of the Journal piece here.


  1. Doesn't everyone know the UAW contracts are not sustainable and are the problem?

    If they expect those little suicide cars that clowns ride in at the circus are going to sell, may I suggest they build Volgas instead -- Save the development costs.

  2. No, the UAW believes in the tooth fairy. Normal people see that if you force the host ciompany to pay unsustainable wages and benefits, the government will bail them out.

    I think the problem is much simpler ... Can they sell cars? I believe that like with the Volga, the shiny new government motors coffins on wheels won't sell. Once the quality issue resurfaces, it's down the chutes.


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