Ford took no TARP money and has retained its independence and resisted the nationalization (socialization) of its business property. NAZI, as in Nazi Germany, stands for national socialism. I say Ford should be supported by buying its products.
Federal control of General Motors is game changer
Daniel Howes April 29, 2009 Detroit News
With the arguable exception of the disastrous British Leyland experiment in the 1970s, even the Europeans never went this far.
Not in post-war France, when Charles DeGaulle nationalized Renault SA in 1945 to punish its founder for alleged enemy collaboration, a stake that has diminished to 15 percent over time. Not in Germany, where the state of Lower Saxony owns 20 percent of Volkswagen AG and its minister-president sits on VW's supervisory board alongside representatives of labor.
Not even across western Europe, where a consortium of France, Germany and Spain controls Airbus SAS, the chief aerospace rival to America's Boeing Co. But the one guy with experience competing against a government-backed entity is Ford Motor Co. CEO Alan Mulally, former head of Boeing's commercial aviation unit.
Good thing, because he'll need it. The week's not half gone and already the U.S. Treasury is in line to control 50 percent of General Motors Corp. with the United Auto Workers set to gain another 39 percent of the automaker. The feds would select GM's directors, effectively giving this White House (and the others to follow) control over GM's strategic direction, top management and even high-level product decisions.
That's just the beginning.
With or without bankruptcy, a Government Motors partnered with the UAW would be a whole new model for the global auto industry, a nationalized company whose labor union owners would be bargaining with themselves, their interests in positive cash flow to finance retiree health care obligations colliding with political interests to preserve wages and benefits.
There's a reason the Europeans (not to mention the Japanese or the South Koreans) don't go there: Too many priorities are mutually exclusive. Government Motors could be a bulwark of infinitely patient capital married to major stakeholders whose goals aren't shareholder return, operational efficiency and market penetration but the social goals of maximized employment, environmental trend-setting and political (damage) control.
"It is not our desire to either own or run one of the auto companies," White House Press Secretary Robert Gibbs said Monday. It may not be, as if saying so makes it so, but that's the practical effect.
And it has potentially profound implications for industry players -- starting with Ford -- who aren't in the same situation but nevertheless would be forced to manage the repercussions on relations with dealers, suppliers, customers, organized labor and a diverse financial community of lenders, equity investors and bondholders.
"We're trying to understand how we can remain competitive," a Ford source familiar with the internal deliberations told me Tuesday. "It's on everyone's radar screen that the government will be a big owner and will have a big interest in making it successful. It's uncharted waters for us -- again. The government can do just about anything it wants."
By now, that should be obvious and a reminder that the Golden Rule -- "he who has the gold rules" -- is the omnipotent force in Detroit's Great Restructuring. If President Obama's auto task force wants to run GM or Chrysler LLC through bankruptcy, it will do so because they're the chief bargainers for their boss. He's the chief creditor, the chief lender and the chief executive-in-chief.
They don't do this in Europe -- haven't come close to it for 30 years or more -- with the possible exceptions of Putin's Russia or Lukashenko's Belarus. Even Germany's Mitbestimmung, the co-determination of the post-war years that splits corporate oversight between executives and labor representatives doesn't deliver shareholder voting power to organized labor.
In this, Obama's Treasury and its auto task force are breaking revolutionary ground.
By subordinating the legitimate claims of investors to those of labor, they're confirming their bias against the Wall Street crowd and, second, what people in this town have known for years: That management's cradle-to-grave commitments to Big Three employees risked outstripping the ability of anyone but the government to pay -- and only then after the company has been nationalized, its bondholders neutered or threatened with bankruptcy and its equity investors wiped out.
For months as GM, Chrysler, the UAW, members of Congress and the Obama administration have careened toward this mind-numbing culmination, I've been asking myself what we're saving by asking the feds to keep big chunks of Detroit Auto on life support.
Already, tens of thousands of jobs have been wiped out. Plants closed. Retirements induced or destroyed. Dealers starved into submission. Suppliers pushed into liquidation. Local and state budgets decimated by the loss of tax revenue. And, now, investors short-changed with a strong arm that would make Tony Soprano proud.
We're saving -- or trying to save -- the political capital of those in power, the outsized obligations of GM and Chrysler to the UAW, and whatever jobs, union and salaried, may be left when this enabled nightmare finally comes to an end.
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