Detroit, despite having a casino in its bustling Greektown neighborhood, is not Las Vegas. In other words, what happens in Detroit does not stay in Detroit.
That's especially true when it comes to the auto industry, staggering under a straight jab and left hook from the faltering U.S. and global economies.
Global? Japan is in meltdown; China and India, recently flush with economic promise, have had to scale back; Britain is bailing out bankers like the crew of a sinking lobster boat fighting a leak; and hell, even Dubai, with its lavish developments and creation of its own islands in the sea, is hoping that Abu Dhabi will help rescue it from the $70 billion debt run up by government-owned businesses.
As the world economy wilts, General Motors and Chrysler are struggling to hammer out recovery plans to prove to the government that billions of dollars in aid will be a good investment.
Charles Wilson, the leader of GM in 1952, famously remarked that, "What's good for the country is good for General Motors, and what's good for General Motors is good for the country.’’
Unfortunately, and this is often forgotten, was the symbiotic notion of this idea — it was only the second half of the line that was frequently quoted.
Indeed, there is a stitch that cannot be taken out of the sewing of Detroit to the economy, and the economy to Detroit. And it has become global.
Even Audi, BMW, and Daimler AG (Mercedes-Benz, nee Daimler-Chrysler) are all catching at least some of the force of the right-left combo of punches. And Toyota has stumbled!
How big is the problem at GM (and in a lesser sense at the other Detroit companies)?
Bigger than California.
I recall watching Arnold Schwarzenegger — in full Terminator mode — drive a giant Hummer into Times Square in New York as part of a promo for the gas-guzzling brand he helped bring to life in the U.S.
Today, a "greener" Arnie is pushing cleaner, more efficient cars and wrestling with a $42 billion budget deficit as governor of California.
That, however, is less than GM’s obligations to retirees or surviving spouses in pension and health care, which come to at least an estimated $47 billion.
There was hope on Feb. 17 that the United Autoworkers Union would agree, as one important step in saving the companies, to take on some of that burden by running the benefits program, though still with some GM assistance.
Labor concessions and plant closings will have to be part of any workable package: What was once a two-headed monster — a management that thought the good times would roll forever, and a union for many years unwilling to redo a deal — has crippled American manufacturers.
But don’t blame the unions. Blame the management that, confident that highly profitable SUVs would roll down the line to eternity, signed off on these deals. It’s hard to give back what you have been promised.
So Saab and Hummer, owned by GM, are on the auction block, and cutbacks in the number of models are being planned. One report said that Cadillac and Chevrolet would be saved, along with (tell me why please?) GMC and Buick (many of whose long-loyal buyers aren’t coming down for breakfast as each day passes). Pontiac will be cut to a couple of models, hopefully as the muscle end of the GM line.
But as we ponder this, as we gasp at GM’s $13-billion-and-climbing bid for federal aid, Chrysler’s $4 billion package, and President Barack Obama’s overall $787 billion stimulus package for the nation’s economy, the watchdog General Accounting Office reports that those amounts are less than the military says it needs to purchase and maintain about 2,400 Lightning II jet fighters for the future.
That figure? Just under $1 trillion.
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