As the madness swirled last week, a certain Robert Lutz was being kept well away from the PR-charged atmosphere in DC. But driving Volt/Cruze mules around in circles (instead of to the capitol) isn’t what gets you “Maximum” for a nickname. And with calls for Rick Wagoner to step down busting out all over, reporters are falling over themselves to put a quarter in the Bob Lutz quote machine. Yesterday we were treated to Lutz’s opinion that Wagoner is the “best CEO he’s worked for,” and today there’s even more hilarity in the Detroit Free Press. “These are somber, serious economic times — but it’s still hard to hang up from a 10-minute phone chat with Bob Lutz without chuckling,” writes Freep columnist Tom Walsh. And boy, he isn’t kidding. “If Congress wants a sacrifice, it should be me,” Lutz told Walsh. “I’m older and I’ve made politically incorrect remarks about global warming, so it should be me.” Unfortunately, Lutz didn’t spend the whole interview doing tongue-in-cheek corporate samurai shtick.
Posts By: Edward Niedermeyer
A UAW local president has revealed that, as we suspected, the much-touted UAW concessions are no concessions at all. Mark McQuillen, president of UAW local 2404 (Charlotte, NC) has filed a report on last week’s emergency UAW meeting, and let slip a tiny detail that had not been previously publicized. In return for allowing Detroit to delay VEBA payments and “eliminating the Job Bank and negotiating a new provision to protect workers that otherwise would have been placed in the Jobs Bank program,” the UAW is said to be seeking “an equity stake in the company most likely in the form of a seat on the board of directors.” This is in addition to a taxpayer funded “special attrition program” which will buy out UAW workers in 2009 “providing that the loans are granted and that the government approves using some of the money for that purpose.” Concessions indeed.
Speaking of wedge issues. In a bizzare inversion of those tabloid baby-bump rumors, there’s a hot tip flying around the autoblogosphere that GM is aborting the Volt program and firing engineers. Things started with an anonymous tip to Jalopnik, saying “My uncle works on the Volt as an engineer. He’s getting laid off Friday because apparantly the project (aka VOLT) is on hold indefinitely.” Early responses from PR flacks was inconclusive, but Autoblog has apparently received word from GM spokesman Terry Rhadigan that “there’s no truth in that statement whatsoever.” Rhadigan went on to hedge a bit, saying “I’m not going to respond to specific speculation. The Volt remains a top priority for our Company and there are no changes to the timing of the program.” With a bailout compromise announcement expected at any time, this little rumor could mean one of two things. Either it’s true, and GM is cutting everything it can to make its “survive to March 31” bill as palatable as possible, or it’s untrue and GM is spreading a lie/allowing it to fester to scare more money out of the pols. Either way, file this under “unpleasant.”
We’ve been keeping tabs on all the divisive, emotionally-charged wedges being driven through the the bailout debate, and frankly we’re beginning to wonder where it will end. Luckily we may be seeing the light at the end of the tunnel, and as usual with these things, it’s some good old reductio ad absurdum. Randi Payton of On Wheels Inc, which publishes magazines and produces Web sites about the auto industry for ethnic minorities, wonders aloud in Automotive News [sub] whether we are “turning our backs on diversity.” After all, as Payton puts it, “we cannot overlook the more important fact that the Detroit automakers are also some of the most socially responsible corporations in the world.” And the key to his argument is the claim that the Detroit 3 “led the embracing of diversity, employing more minorities than any other entity, next to the federal government.” Now I certainly wouldn’t dispute Payton’s point that “Ford Motor Co. was the first corporation in America to pay fair wages to blacks, essentially creating an African-American middle class,” but to do justice to the term “diversity” we will have to take a closer look at Ford’s history than that. While Henry Ford opened groundbreaking opportunities for African-Americans, his anti-Semitism pretty much knew no bounds. Time for a definition check on the term “diversity?” Better yet, let’s not justify the bailout of failing businesses on ancient history. Or the most divisive issues we can possibly think up.
It’s should be fairly obvious by now that Saturn is a dead brand walking. Little remains of Roger Smith’s import-fighting concept anyway, as the “different kind of car company” now consists solely of rebadged and Americanized Opels, fine young CUV-annibals, and the Sky. None of which sell very well. So, dead by Thursday, and that’s all she wrote? Not according to those crazy, mixed-up kids at Automotive News [AN, sub]. “Saturn has a product program, both current and future, that is currently in our plans,” GM Marketing Honcho Mark LaNeve tells AN. “But a lot of what is in our plans is in a state of flux right now given the state of the economy and everything.” Understatement of the week day hour? GM hopes to conceive a new business model to make the brand profitable, according to LaNeve, because a sale won’t happen. Hello, China? Then again…
Automotive News [sub] reports that the exit of 5,000 salaried employees in the past week has created “chaos” within Chrysler, and bankruptcy rumors have suppliers considering cash-on-delivery demands. According to Chrysler spokeswoman MaryBeth Halprin, “the claim of chaos is unwarranted. There is certainly in this first week without 5,000 employees a transition taking place,” she said in an e-mail to Automotive News. “This is an opportunity to continue the transformation of our company, rethink work processes and focus on core function.” Right. For more on ChryCo’s “transformation,” check out this story from the NYT.
As yesterday’s Senate hearings wound down, it was hard not to be impressed with how pragmatic the conversation had become. By DC standards, at any rate. But any hope that the second day of testimony would build on the previous day’s momentum was misguided. Far from picking up on the previous day’s progress, the House Financial Services Committee testimony and questioning returned the conversation to step one, in a flurry of irrelevant posturing and evasive non-answers. Backsliding and tangential wanderings notwithstanding, we did learn a little more from today’s hearings.
Chrysler has been battered in the last two days of congressional hearings. If there’s one thing that everyone in congress seems to agree on, it’s that Chrysler isn’t worth the hassle. Not only is it the smallest of the three automakers, but the Cerberus issue has loomed large as well. Today alone Nardelli told representatives at least twice that as far as he was aware, Cerberus didn’t have the funds to revitalize Chrysler. Needless to say this didn’t go over particularly well (private equity is deliciously easy to demonize), and Nardelli was looking increasingly stressed as the hearings dragged on. Probably aware that it’s about to become a sacrificial lamb (or, in a last-ditch sympathy ploy), Chrysler has reportedly hired law firm Jones Day as bankruptcy counsel, according to the Wall Street Journal. Neither side has confirmed or denied the move, but since the WSJ is quoting “people familiar with the matter” it must be true. Corinne Ball, who previously worked on the Dana Corp reorganization, GM’s Daewoo acquisition and “many cases involving the United Auto Workers union,” is said to be handling the case.
James Malackowski penned an editorial in today’s Detroit News, improbably arguing that “much of the privately funded green and energy innovation in the United States will stall or likely never come to fruition if the domestic automobile industry fails.” Malackowski reaches this conclusion by comparing the Detroit 3’s patent portfolio in four areas (emission control, hydrogen fuel cells, hybrid/electric tech, and “emerging related technologies developed by these same firms including solar, wind and other green inventions”) with those of 15 other large automakers. His conclusions, presented without sourcing, are that “GM has higher average quality and newer green technology and patents than the other 14 automakers combined”; “Ford and GM together hold approximately a third of all green technology patents and the related value”; “GM has 70 percent of the patents in the emerging technology category. This domestic share increases to 85 percent if Ford is added”; and “Ford owns 30 percent of all patents with a similar related value measure in emission control innovation.” Unfortunately for Malackowski’s argument, comparing the number of held patents is meaningless considering that these innovations are simply not reflected in these firms’ products.
See Corker’s post-hearing interview with CNBC here.
The tone at today’s nearly six-hour congressional hearing on the auto industry bailout was markedly different than the now-infamous hearings of 11/18. Last time around, the automakers thought they were flying walking into a bailout-friendly environment, and maintained their PR-fluffed facade of a few good companies who had fallen on hard times and needed a hand to reach a glorious, fuel-efficient future. And though several representatives laid into the CEOs and their companies, those bashes were little more than populist sound and fury, signifying nothing. Today’s hearing was by no means devoid of politicking or disingenuousness, but a new sense of urgency was palpable. And for good reason. With Senators still far from a consensus, the automakers and their sidekicks had to abandon their long-held preferences in favor of the best available outcome. After all, saying “bankruptcy is not an option” only works when everyone agrees with you.
The truth is out: as Chrysler CEO Bob Nardelli drove a Chrysler Aspen Hybrid to today’s Senate Banking Committee hearings. Confirmation comes from Jet-Gate Media Inc, formerly known as ABC News, which dedicates no fewer than four pages to the symbolism of CEO transportation choices. Of course Nardelli gets a good hosing for choosing a ride that will be canceled within less than a year of its introduction. ABC contrasts the high cost and marginal returns of hybrid vehicles with the currently low cost of gas, and concludes that (in the words of Kelly Blue Book’s Jack Nerad) “a hybrid alone will not save Detroit.” In short, the parade of Volt/Cruze mules, Chrysler vapoware and assorted hybrid and flex-fuel vehicles are a PR show to gain environmentalist support for a bailout. Shocking stuff, I know, but the disconnect between self-image and reality is key to this entire situation. Slate’s Daniel Gross explores this “Detroit Delusion,” arguing that “the markets are treating the auto companies as if they’re already in bankruptcy,” and “the federal funding they’re requesting is necessary to help manage failure, not to stave it off.” Luckily Senators seem to be focusing on these financial issues rather than taking the eco-future bait.
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