By Li Hong, People’s Daily Online
US President Barrack Obama is serious while obviously anxious to save the General Motors and Chrysler, two emblems of American manufacturing bastion. However, the ‘bitter pill’ he prescribed for the wounded two former auto giants might prove to be too heavy-handed to harvest a windfall of his expectation.
Guided by an auto revamp task force, Obama ousted the chairman of General Motors, Rick Wagoner, while giving G.M. 60 more days to work out another viable plan, and instructed Chrysler to form a partnership with the Italian automaker Fiat within 30 days as strings for receiving a renewed round of government bailout money. The White House signaled that it did not have confidence in the restructuring plans put forth by the two struggling automakers.
World stock markets responded negatively to the drastic measure. Worries about the possibility of a bankrupt G.M. and that a broad picture of US auto industry getting even messier hung over investors. The major indexes from Wall Street, to Asia and Europe all tumbled. Of course, jitters over the outcome of the Group-20 London summit, whether the global leaders agree to a common course to prevent a worldwide downward slide, added to the fear.
American critics have bombarded Obama’s forceful intrusion into corporate management, while taking a very much lenient and accommodating attitude towards the bankers, the wrong-doers leading to the financial crisis in the first place. An online post claimed he is “responding to the looting of Wall Street by busting the U.A.W. feels an awful lot like responding to September 11 by invading Iraq.”
I will not peck at the double standard apparently in the pipes of the White House. The dire situation that G.M., Chrysler and Ford are in today is partially attributable to the sub-prime housing mortgage debacle, which was the collective making of Wall Street bankers and the U.S. Federal government, typically, the low-interest-rate bubbling policy taken by Alan Greenspan in his high days. And, the Congress also played a role to let credit unworthy people “own” their houses.
Although the management of the G.M. under Wagoner, and two other plants, are problematic in the past decade or so, American customers’ penchant for big gas-guzzlers like Hummer and Cherokee, and the American government’s stubborn inaction in those years to legislate for oil conservation and give incentives for environment friendly vehicle production and consumption, lowered viability of the Michigan Big-Three.
Wagoner once championed the Chevrolet Volt, a plug-in hybrid electric car that G.M. plans to introduce in 2010. That is too late for him. Wagoner has said that one of the moves he regretted most was G.M’s decision to kill the EV-1, an electric car that could have helped G.M. brighten its reputation industry-wide, and could also fend off a fierce competition from Toyota and Honda.
Now, under the pressure of a weakening economy and a tightening credit market that have dried up car sales, G.M. and Chrysler could only beg for lifelines from Washington for survival. No wonder Wagoner murmured that he was urged to “step aside” by Obama administration officials.
Will the step-down of Wagoner usher in an era of a “new vision and new direction to create the G.M. of the future”, as Obama said loudly at the White House. No one is sure about the prospect, actually. Whether Wagoner is a sacrificial lamb doesn’t matter much now, as he is gone, the stake is high with the lives of tens of millions of American auto workers and their families.
Wagoner might be regretful that he was too slow to shift G.M. lineups to fuel-efficient smaller vehicles, while foreign competitors, led by market-savvy Toyota, out-paced Americans in the contest. But timely input of R&D and talents could narrow the gap in a short run.
However, the greater question with the American Big-Three is their huge health care and pension burden. Only the automotive unions agree to cut their workers’ benefits, or after Obama administration learn from Europeans to erect a socialized safety net and peel off the burden from the corporations, will the American auto industry become more nimble and thus profitable in future competition in the market place.
The article represents the author's view only. It does not represent opinions of People's Daily or People's Daily Online.
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