Sunday, April 5, 2009

Auto-Da-Fe

--or literally "act of faith" which may be one of the most spectacular euphemisms of all time referring as it does to Inquisitional burning at the stake. GM CEO Rick Wagoner is the latest heretic to feel the wrath of the Lord High Inquisitors of the new administration. Veteran COO Fritz Henderson took Mr. Rick's place and must be feeling less like a CEO and more like the next guy over in the tumbrel. In any case Wagoner surely must have known when the process of beseeching the feds for a bailout began that it would inevitably lead to him being required to fall on his sword.

Whatever benefits accrue to being CEO of a major corporation the act of ascension to these giddy heights must be tempered by the fact that one is effectively stretching out ones neck on the executioner's block. Even the abjectly penitent CEO's donning of the dollar-a-year hair-shirt fails to keep the hounds at bay these days. Now the exec must channel Lewis Carrol and attempt to achieve six impossible things before breakfast. Detroit execs are being coerced into not only figuring out how to become profitable in a deep recession but also to somehow find the ocean of cash needed to drastically increase overall fleet mileage, reduce CO2 emissions, increase safety margins, increase recyleability, cut labor costs without actually cutting jobs, and to "invest" in new untried and to date unprofitable electric power technologies. Not surprisingly every one of these mandates is effectively contradicted by most if not all of the others.

The Obamanation has ganged up on the auto manufacturers for the simple reason that it affords them the opportunity to jumpstart their grand overarching agenda of fighting climate change in ways that merely propping up financial institutions can not begin to do. Flinging countless billions at Wall Street is a major and costly annoyance whereas the political PR value of bashing Detroit cannot be denied because the Big Three stands second only to Big Oil in the progressive pantheon of corporate villainy.

They can get away with this because the general public has little idea of how the auto industry works or how huge the regulatory burden with which they must deal. Unfortunately most politicians have very little more understanding of these issues and progressive pols not only know very little but care even less. The exigencies of modern product development cycles and cost-effectiveness considerations are mere trifles to be brushed aside as either niggling irrelevancies or venal corporate foot-dragging. In effect the auto industry is guilty until proven even guiltier.

It must be a source of severe irritation for the O'nation that the auto consumer is proving so un-obligingly consistent. In a recession with sales off roughly 40% overall the most popular vehicle is still the Ford F150 pickup truck. Folks are buying far fewer vehicles but the mix of those vehicles that are selling is virtually the same as a year, or two or three, ago. So the administration's tactic is to browbeat manufacturers into no longer offering what the public clearly wants to buy and to force them to begin making vehicle lines that currently consumers in large part do not want to buy.

As Rahm Emmanuel has said it would be wrong to let a crisis go to waste. The crisis is touted to be severe recessionary auto sales drops endangering big chunks of the country's industrial infrastructure. So let us give Detroit City the cash they're begging for but let us not waste the opportunity to hold their feet to the fire in service to the progressive regulatory wish-list held in abeyance until the ascension of The One to power.

Thank goodness Ford has not yet taken the thirty pieces of silver so there might be hope for Henry's heirs. Regarding GM and Chrysler they, if they survive at all, bid fair to become wholly owned subsidiaries of the Federal Government who in good, green, and union approved, fashion produce nothing anyone wants to buy at prices no one can afford.

2012, and/or sanity, seems a very long way off.

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