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Not Buying What The Big Three Are Selling

by @ 5:11 pm on December 4, 2008. Filed under Auto Industry, Business, Economics

The auto industry beg-a-thon was in the Senate today, and it’s fairly clear that they’re not really convincing anyone that it’s a good idea to give failing businesses more money:

WASHINGTON — As the Senate banking committee debated a potential rescue package for American automakers, the committee chairman, Senator Christopher J. Dodd of Connecticut, suggested that it would be difficult for lawmakers to approve a financial lifeline for the three companies.

Mr. Dodd used his initial round of questioning to stress that the Bush administration or the Federal Reserve could act unilaterally to aid the auto industry. The chief executives of the Big Three — Alan R. Mulally of Ford, Rick Wagoner of General Motors and Robert L. Nardelli of Chrysler — were before Mr. Dodd’s committee on Capitol Hill asking for $34 billion in assistance.

“There are a number of ways that we could address this issue,” Mr. Dodd said. “The one that has received a lot of attention is whether Congress will act. If Congress is going to act, it is going to require some significant effort of the coming days.

(…)

Mr. Dodd’s skepticism about the ability of Congress to generate enough support for a new rescue plan, coupled with opening comments by Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, who announced that he would strongly oppose a taxpayer bailout for Detroit, signaled just how steep a challenge the auto executives were facing even before any them fielded a single question Thursday.

Mr. Shelby in his opening remarks said: “I intend to oppose bailing out the Big Three auto manufacturers.” And he sharply criticized the companies for failing to succeed against their foreign-based rivals.

“The firms continue to trail their major competitors in almost every category necessary to compete,” he said.

I was able to listen to most of the hearing on C-Span today while I worked and, I’ve got to say that the auto industry representatives were incredibly weak in their presentations. Their basic argument seems to narrow itself down to “give us the money and trust us” despite the fact, as more than one Senator pointed out, the balance sheets make it hard to believe that they’d be able to repay the money that they’re asking for.

Weakest of all was the representative from the United Auto Workers who pointed to the weak-kneed concessions that were announced yesterday as evidence that the UAW had entered the 21st Century, but cho consistently refused to address the fundamental wage and benefit issues that are strangling all three of these companies.

There’s one more round tomorrow before the House Finance Committee, but if this is any indication I’m betting that they’ve actually lost votes in Congress since the last time they were here.

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