Monday, March 30, 2009

General Motors gets another chance they won’t take

Here’s Jim Manzi with “Detroit’s predictable failure

In regard to GM, the government will provide 60 days of operating financing, and give them another shot at developing a plan for viability. In effect, they get a two month stay of execution. If the administration lives up to these words, we would have a temporary intervention, but get out of the awful business of managing commercial enterprises via government quickly.
The crunch, of course, will come upon the expiration of these new deadlines. The current administration can get away with punting on tomorrow's deadline without losing all negotiating credibility because they didn't make the initial deal. But if they let these companies off the hook again, it's hard to imagine management, unions or bondholders taking any future threats to let the companies go under very seriously.
Frankly, I don’t see why GM and especially the UAW unions would believe any threats from the Obama administration. By forcing out Wagoner, Obama has taken ownership of the General Motors mess and he's telegraphed that there's no way he’d allow bankruptcy. Since that’s off the table, the GM honchos aren’t going to put their heads in a noose and the unions similarly aren’t going to make concessions that enrage their blue-collar base. They’ll wait for another bailout or a solution forced on them by the government. But you'll never hear the "B" word.


Anonymous said...

You miss the point. To make it work, (even) obama knows the union guys must give a lot up. Wagoner is the sacrifice to offer up to the UAW for the required concessions. Since obama knows he owes the UAW, this is the way he is able to sell it. Simple politics.

Anonymous said...

UAW is not going to give any concessions. Next step, Oama will appoint union reps to the GM board. And keep bailing GM out, funneling more funds to the UAW.

Anonymous said...

And keep bailing GM out, funneling more funds to the UAW.

Then they turn a profit, right?

I mean, they make a car somebody wants to buy & start making money?