Sunday, June 10, 2018

Sell Ford and GM to the Chinese (Part 2)

I am quite frankly bemused that the Big Three (or whatever is left of them) are once again badgering old, broke, and tired Uncle Sam for moolah. The current mortgage mess is dredging up endless mentions of the Chrysler bailout of so long ago. It reminds that, in nearly three decades, Detroit's fortunes have gone nowhere but down. I do not need to elaborate on the following points as they should be self-evident to any reasonable, unbiased observer:

(1) That the automakers are now billing themselves as environmental champions keen on high fuel efficiency and alternative power sources is bunk. For starters, they have been combating tighter emission regulations for years. Had they started selling green vehicles before gas prices spiralled upwards, they wouldn't be in as much of a bind as they now are in. Years of selling monsters trucks with poor mileage that can't be moved off dealer's lots nowadays is testament to this. The "American Prius" is nowhere to be found in dealers' showrooms. And now politicians are saying that these same automakers will lead the charge to an energy-efficient future? Give me a break.

(2) Political pandering--especially in key swing states with large auto manufacuring presences--is largely the reason why politicians aren't bickering too much about facilitating another bailout. Ladling pork and vote-getting go hand in hand. Now more so than ever with the 2008 elections looming large.

(3) One of the complaints these automakers have expressed is that credit is not easy to obtain ever since their ratings were downgraded to junk. Therefore, they need to obtain government-sponsored funding. Again, what kind of capitalist economy is this where credit rationing is done based not on creditworthiness but rather political expediency? Who is it who said from each according to his abilities, to each according to his needs? American automaking is becoming more like a communist enterprise than anything remotely capitalist. Make crappy products few want to buy and be rewarded for it: sounds like the halycon days...of the Soviet Union.

(4) At heart, what we have here is yet another American industry which cannot cut it in its own backyard. The US airline industry is known worldwide for its substandard service; it's able to cadge bucks off Uncle Sam for "national security" reasons. Can automakers make the same (dubious) claim? Sammy's finances just keep getting worse. Airlines...automakers...banks... the supplicants lined up at the door of the biggest supplicant of them all--Sammy the Beggar-- seems endless.

(5) Is it just me or are "private equity" workouts not supposed to be at taxpayers' expense? Isn't sorting matters out in private the whole reason behind purchases like that of Chrysler by Cerberus?

As I've said before, the solution to the automakers' woes is staring them in the face: Sammy the Beggar keeps rattling his cup in front of Mao the Multibillionaire (China). Detroit and the politicians should recognize the writing on the wall: for the benefit of all concerned, it's better to sell Ford and GM to the Chinese. The logic is impeccable:

(a) Protectionism and China-bashing will of course come to the fore if the US automakers and Chinese ones enter talks about, say, Chery buying Ford or GM. Nevertheless, if Detroit wants to keep thousands of auto jobs, it seems the one with the really deep pockets are the Chinese, not Sammy. Logically, being employed by the Chinese seems to be a better proposition than being unemployed. As someone once said, don't offend the Chinese, the real owners of America.

(b) More importantly, what would the Chinese gain from buying the likes of Ford and GM? They would gain recognized brands and established dealerships. Unlike the Japanese (too many to mention) and the Koreans (Hyundai and Samsung), the Chinese have not been enable to establish brands with global cachet (at least so far). These the automakers can still provide a semblance of in America--still the world's largest auto market--although things may get worse with delay.

(c) Chinese auto marketing is, well, kind of cheesy. Especially troubling is their seeming inability to come up with respectable car names. Even the Big Three can teach them a thing or two about these things. Don't believe me? Go see for yourselves.

America must learn to swallow its pride and recognize these manufacturing dinosaurs have seen better days. If the automakers want someone with deep pockets to partner with who are able to throw wads of cash at them, then they will come from the Middle Kingdom. While Detroit can still offer something of value, they better get to it quickly. The only question is, will the Chinese want them, baby?

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