•
There a moments from time to time when you wonder if people are, as my high school civics teacher would say, “using there head for something besides a hat rack.” When a group of lawmakers who I believe to be mostly Democrats decided to reverse the reduction in GM and Chrysler dealerships, I found myself wondering what the crap they were thinking.
For about two seconds the idea sounded reasonable. We do have an economy which is hemorrhaging jobs. Automotive dealers do provide jobs. The government does own a controlling stake in these companies by virtue of the bailouts. I guess the legislature is a sort of voting member of the board. Ok, that’s where the logic begins to break down.
Break downs in management, as any basic management course will tell you, almost always occur when there is an unclear chain of command. Trying to make two bosses happy almost never works. In case the lawmakers haven’t noticed, the man at 1600 Pennsylvania Avenue is trying to manage the problem. The Obama Administration, an army of bankruptcy lawyers and boat load of stakeholders have spent months trying to save the two car companies. The bankruptcy of the car companies has been painful for everyone. Workers, management, bond holders and stockholders all got punched in the financial nose. Some dealers got hit too.
So why would a few members of Congress decide to pick winners and losers after months of negotiation have been mercifully concluded? Why are dealership jobs more important than assembly line jobs or bond holder losses? I’m no economist or automotive expert but, in my town I see a two to one ratio of domestic to foreign dealers. Having too many dealers has to be counter productive.
I haven’t looked but, I’ll bet, as usual, Congress’ interest is probably about the money. Dealer groups have donated the right amount to the right Congressional campaigns. Obviously, they gave more than the other interested groups I mentioned. I wonder if we will ever be tired of people with the most money getting the best representation in our capitols.
•
A co-worker of mine and I were talking about a “bailout” for the Big Three American auto makers. His stance was similar to the senator from Alabama, Richard Shelby. Shelby asked the Big Three CEOs, “Why should we believe your firms are capable of restructuring now when you weren’t able to do it under more begin conditions?” Now, I am not sure if CNN Money got the quote wrong or if the senator from Alabama continues to be as inarticulate and embarrassing as usual. My friend was also embarrassed. I admit I had been prepared for his right-wing stance. However, after reflection, we quickly determined three members of his immediate family could lose their jobs if the American automakers failed. The problem my friend didn’t understand was that Shelby and the state government had been doling out money to the auto industry for years. But the money was for foreign car makers.
I tried to find a quick and dirty amount of money we had spent attracting foreign carmakers to the United States. If you consider Industry Week’s average incentive of about $100,000.00 per job and multiply it by the Federal Trade Commission’s estimate of 35,000 jobs, you quickly get to about three and a half billion dollars. As an engineer, I usually have to give you a statistically based analysis on how confident I am about the three and a half billion dollars. I won’t do that. However, I bet you a nice bottle of single malt I didn’t include a third of the money we have spent on incentives for foreign car makers.
So, Senator Shelby, if you want use rhetoric to make points with your right-wing free market worshiping constituents, go ahead and be a hypocrite. Remember you helped spend 300 million on one foreign plant in Alabama at a cost of $150,000.00 per job. Spending 35 billion on 240,000 American auto maker jobs totals about $145,000 per job. After all, even my right-wing buddy at the water cooler has decided to give it another look.
POST SCRIPT:
It has been pointed out that the incentive money most of the foreign car manufacturers receive is not a loan. Those monies are grants or gifts. The American carmakers are asking for loans.