DETROIT — President Obama has dropped the idea of appointing a single, powerful “car czar” to oversee the revamping of General Motors and Chrysler and will instead keep the politically delicate task in the hands of his most senior economic advisers, a top administration official said Sunday night. [...] The official also said that Ron Bloom, a restructuring expert who has advised the labor unions in the troubled steel and airline industries, would be named a senior adviser to Treasury on the auto crisis. Read more here.
I have my own reservations on this plan because historically, every time a government tries to run a car company, the end up being in a worse shape than before. Those who are old enough to remember British Leyland in the 70s should understand this very well. And don't forget the tin worm infested Alfasud when Alfa Romeo was nationalized by the Italian government.
Image from Birmingham Mail
Of course, we all know how all historic marque have gone to the Asians. Jaguar and Land Rover to Tata, MG-Rover to Nanjing Automobile Co.
Who is Ron Bloom
The American media paints Ron Bloom, the man tasked to advice the treasury on the US domestic auto industry restructuring as a tough talking bulldozer of a negotiator. He is said to adopt a so called dentist chair policy in negotiations, with the patient grabbing the dentist's balls and say "Let's not hurt each other alright?" He has a good track record of turning around ailing steel and airline industry companies.
Haven't we seen this before? The British had a similarly talented guy by the name of Sir Don Ryder, who produced the Ryder Report which was supposed to turn BL around. And we all know the tragic ending to BL and all its historic brands.
The car industry have some very unique traits that makes it different from other typical heavy industries like aerospace / airline or steel. In those sectors you have a set very objective variables, most of them being cost, production and trade policies related, that you need to look into. The car industry shares all that but there are also many other emotional attributes that come into play. People don't buy cars the way businesses / consumers order a roll of steel plates or a seat in an airline. There is an intangible emotional ties, and sometimes a sense of national pride that people attach to cars. And then you have a very diverse but non-standardised set regulations that you have to meet. Crash safety, environmental regulations and the local taxation and tariff, all of which differ from country to country. Running a car company is not for the faint hearted and Ron Bloom is going to mess up the American auto industry terribly if he were to apply the same logic from restructuring airline / steel / railway / utility companies.
I already have friends and acquaintances whose jobs are being threatened due to the financial woes at GM and Chrysler. These people are not directly under the payroll of GM or Chrysler, but are suffering from the ripple effects which are now reverberating throughout the entire industry supply chain. Unlike previous job cuts, this doesn't just affect blue collar plant workers, but white collar engineers, people with Masters degree with decades of experience.
"I am going to do my best to get out of the auto industry," Doug Zupan, former designer at Chrysler Technical Center.
Actually there is another way out, but politicians and high level auto industry executives are not willing to discuss this in public due to the obvious political sensitivity - to break-up these companies and sell them to Asian companies.
A fellow industry executive associated with the former MG-Rover Group once told me that MG-Rover would probably be in a better shape if it were managed by Honda Motor Co. The previous Rover 200, 600 and 800 series were all based on Honda models and Honda was said to be interested in exploring further level cooperation with MG-Rover. But the British government and management of MG-Rover found it difficult to pass control of their manufacturing industry's pride and joy (however ridiculous that may sound...) to an Asian company. They decided to sell it to BMW Group who then discarded MG-Rover almost as soon as they took over the company. BMW executives gave up restructuring MG-Rover and cut their losses by selling it to the Phoenix Consortium for a symbolic 1 British Pound. Eventually MG-Rover ended up in the hands of the Chinese (Nanjing Automobile Co.).
Various Chinese companies are rumoured to be interested in the individual brands of GM and Chrysler and Ford, though they were officially denied, due to political reasons mentioned above. A consortium of Middle Eastern investors have also expressed interest in the Hummer brand but are unable to raise sufficient funding due to the tight credit market.
American politicians need to focus on doing what is best to protect American jobs and not be clouded by their white men (or brown men?) ego. In this time and age, what is an American / British / Japanese car? A GM model might be more Mexican than American, while an equivalent Toyota could actually be more American than a Ford. What nationality is Renault-Nissan? The Japanese failed the Skyline GT-R. It was a Brazilian born Lebanese CEO using French money who resurrected the idea. Alfa Romeo is now run by a German guy formerly from BMW M. I could go on and on with Mini (American designer, German management) and Aston Martin (Danish designer and German CEO) and so on but you get the picture.
After receiving the first round of USD 14 billion bailout package, GM and Chrysler are now asking for an additional USD 16.6 billion aid. There is no telling when is this going to end, it's almost as though as tax payer's money are being thrown into a financial black hole. The worse thing is Chrsyler is owned by a slush fund rich private equity group Cerberus Capital who have done very little on their part to inject more capital. I will be flipping mad if I am an American tax payer.
0 comments:
Post a Comment