Detroit Blames No Car Czar For Lack Of A Plan

Well you knew this was coming, didn’t you. The WSJ reports late today that the auto companies are behind schedule in putting together their plans for financial survival. Naturally, it’s not their fault. It seems the lack of a car czar is to blame.

According to the Journal, critical negotiations with their debt holders on a debt for equity swap and talks with the unions are nowhere near any sort of conclusion. Let me rephrase that last statement. Chrysler hasn’t even started talking to its bondholders and GM just submitted a term sheet to them. As for the unions, the article says that “little progress has been reached with the UAW on cutting labor costs.” It goes on to say that the most contentious point between the unions and the companies is a lack of clarity on how to define competitiveness.

Jesus Christ! Are we back to what the “meaning of is is?” We’re talking about numbers here guys. You figure out how many cars you can sell, what it’s going to cost you to make them, what your other costs are and come up with a figures that let you get to that point. But once that simple exercise became an exercise in politics via their bailout, the prospects for a rational solution flew out the window.

Here’s how this plays out. Obama doesn’t want these guys coming back on February 12th with their plan while he’s trying to justify the fiscal stimulus plan and TARP ll, so the lack of a czar let’s him kick the can down the road. Congress and the auto industry stakeholders enablers go to bat for their interests as the whole thing starts to be reworked. Forget viability, rescue will become the watchword. All sorts of spin is going to be forthcoming about setting these companies up to provide energy independence and restructuring them for a “green” world. American jobs will be invoked as a rationale for non-economic decisions and before you can say appropriation the Congress will be at work on a new spending program. After all, when you’ve just spent close to a trillion dollars this solution is going to be pocket change.

There was a slim chance a couple of months ago that a free market solution might have been invoked. A Chapter 11 filing would have worked with the government providing the necessary financing. It was probably always a chimera and the executives and union leaders knew so. That option no longer exists. The issue is now political and political it will stay.

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