While the announcement and one from Ford which suggested that they too would be closing until after the first of the year, was not portrayed as blackmail, with the swift reaction by the Bush administration in putting together a bailout package, the move by the two companies obviously worked in moving the government from rejecting any bailout by the Senate last Friday to supplying 17.4 billion dollars now.
It is normal operational procedures for automakers to shut down the week before and the week after Christmas. Chrysler’s announcement extends that for more than two weeks while Ford was considering at least one if not two additional weeks of shutting down operations. GM has not made such an announcement but I am quite sure that if the bailout had not been pushed through, GM would have followed suit.
What makes this move by automakers so suspect in using the shut down as a form of corporate blackmail is the fact that there had not even been the suggestion that operations would be shut down until after the Senate rejected the bailout passed by the House and the President was hesitant to tap into the 700 billion dollar bailout slush fund passed in September for mortgage and banking interests.
Then came the announcement about shutting down operations and the White House worked around the clock from the moment of the announcement to create a package which includes 13.4 billion in low interest loans to GM and Chrysler in December and January with an additional 4 billion available in February. Ford has not shown interest in the short term loans as of this writing.
The loans call for the companies to show financial viability by March 31, 2009, but as with any other government money, if this deadline is not met, you can bet that there will be an extension followed by another and another and so on. In fact according to the White House the targets, “would be non-binding in the sense that negotiations can deviate from the quantitative targets…providing that the [company] reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.”
In other words automakers can continue with business as usual as long as they can provide the government with excuses as to why they have not reached projected goals and financial viability. Which is EXACTLY what they have been doing for years and one of the major reasons that the ,”Big 3,” find themselves in their current financial dilemma.
Once again companies are rewarded with tax payer money for failure without any real guarantees that the failure will not continue. The illusion that was created by automakers that bankruptcy was not an option because it would close operations and allow massive loss of jobs has been bought hook line and sinker by Washington.
Chapter 11 would have provided bankruptcy protection while allowing automakers to reorganize, replacing poor management and unwanted product with new management and pruduct that the public wants. Also the court would have reconstructed existing UAW contracts to allow better financial arrangements for the companies. Now the bailout bucks will protect the Unions and only delay the automakers from having to deal with financial viability.
You can be assured that when March, 2009 comes around and the companies have not improved their bottom line, the CEO’s of GM, Ford and Chrysler will once again drive to Washington in their hybrid show cars and expect Congress to provide additional money. This time with a larger Democrat majority, the automakers will be greeted with open arms and open Congressional coffers asking automakers, “how much do you need! ”
Ken Taylor http://theliberalslies.blogspot.com