The Detroit Outsider didn’t want to do this. But the question of a bailout for the U.S. automakers is well into its second month, and a bill passed by the U.S. House of Representatives today faces opposition in the Senate. Even if short-term aid is granted, the debate will continue into 2009 and possibly beyond. A poll released today reflects that Americans are split roughly 50/50 on whether the federal government should act. It’s understandable; there are strong, legitimate arguments on both sides, but they truly are two divergent sides. At one extreme is the America typified by California and the Northeast that has no use for American cars and sees few enough daily to actually believe Detroit only makes cars “no one wants.” Unfortunately these are regions of dominant influence: the mainstream media, Washington D.C. and Hollywood. Back in reality, the Detroit 3 account for about half of the cars sold in the country—the whole country, which means someone’s making up for the folks who wouldn’t set foot in a Chevy dealership and think people buy American only because they have to. (To be fair, some of them do.) At the other extreme are the people of Detroit and its surrounding region that work for or rely on the industry, directly or indirectly, and who stand to lose too much to be objective, or at least to be viewed as credible on these issues. And who’s sorting through all this? Our elected representatives, who play the role of ropes in tugs-of-war among their constituents, their contributors and their inestimable egos.
What’s missing is a voice in the middle—someone who’s not in Detroit but knows both it and its people. One who’s in the industry—yet isn’t. The Detroit Outsider will be that voice. The D.O. knows how complex this situation is and over the years has come to recognize that people, organizations and companies in conflict are seldom as unreasonable as they may seem. Once you dig in, you find the misunderstandings behind the tension. Now, don’t think this is some post-partisan, up-with-people kumbaya movement. Quite the contrary. Rule No. 1 of The D.O. is that you’re all going to get your asses kicked. Haircut? I keep hearing that all the players will need to “take a haircut.” What you need is your asses handed to you—Chrysler, GM, Ford, auto workers, consumers and legislators. We don’t end up in situations like this because of one bad guy, or two or even three. We’re all responsible for this crap. That said, you’d better believe some players are more responsible than others. That’s how the real world works.
The Detroit Outsider will do whatever he can to shed light on this historic conundrum as if our lives all depend on it. They do. He will also tire of referring to himself in the third person, but right now it’s remarkably satisfying. First, some basics so you don’t think this is one of those phony astroturf campaigns to spread pro-Detroit propaganda. To follow my arguments, you’ll need to understand, or at least entertain, the following predicates.
A. There are no good options.
If you keep thinking of this as a question of saving a company or two, or even of saving some jobs, you’re missing the whole point. On their merits, GM and Chrysler might not be worth saving, and Ford is only a step or two behind. They need taxpayer money because they can’t get private capital. Frozen credit plays a part, but the main problem is they’re just a bad investment in their current state and the state of our economy. As for the jobs argument, people will lose jobs, bankruptcy or not. The difference is how many, how quickly, under what circumstances and what the consequences will be. To understand our predicament, you must accept that, economically, we’re fucked. But that doesn’t mean we should throw our hands up and look the other way. We can still influence how fucked we are, and how we are fucked. Take politics for example. If you believe politicians are all crooks, The Detroit Outsider might not argue, but some are still better than others.
B. GM and Chrysler failure is imminent and would devastate the economy
The nightmare scenarios aren’t hyperbole. The supplier base will fall, affecting all auto manufacturing in the States, including foreign transplants. Scores of people will be out of work, possibly sans severance. Money will stop flowing. We lost more than a half million jobs in November, and already people and companies are hoarding cash, concerned that they’ll be next or, as someone recently told me, because it would feel wrong spending money when so many others can’t. You see how this can get out of control? We’ve proven that we can spend our way into trouble, but we can also cause problems through not spending. The D.O. isn’t an economist, but he knows GM’s presence across the country—locally, regionally and nationally—as well as globally. More than anything, I was convinced of the direness of circumstances when people from foreign transplant car companies intimated that they don’t want to see the domestics fail and bring down the supplier base. All it takes is one major part or subsystem to disappear and the lines grind to a halt. Where the transplants have been in this plea is a good question. They officially have no opinion on the matter, and for competitive reasons that makes some sense. Their shareholders probably don't want them standing up for the competition, for example. But it speaks volumes that the companies best positioned to benefit from their competitors’ fall don’t want to see it happen.What’s next?
The Detroit Outsider will be delving into these issues and more, right quick, starting with the most important, convincing Americans that they should act. Coming soon:
"Bad Cars as Capital Offense: Don’t Save the D3, Save Yourselves"