Thursday, December 18, 2008

Car Wars

Chrysler has closed its plants for a month. At least that's the announcement. I'm not sure if that's its assembly lines, or if that's all its operations. If you want to minimize that speak of merely extending the customary holiday shutdown of assembly lines by a couple of weeks. If you want to play it for impact, couple a total shutdown of operations with its dealers pulling $60-million a day out of the company for fear of bankruptcy

It's all in the wrist.

Chrysler is an interesting case because it's owned by Cerebus, a much more vigorous version of the Ford family and far better connected politically, with more ability than GM to play its cards close to the vest because neither Chrysler not Cerebus are publicly held. And before that it was owned by Daimler for a decade, long enough to shift its corporate culture. If there was ever a group of people where it's a good idea to watch what they do, and not what they say, its Team Chrysler.

Meanwhile, the single issue Johnnies are making hay with the situation. I'm not sure whether they are an impediment to, or merely a distraction from, resolving the situation. The Republican Senators from states with foreign assembly plants are clearly in the first catagory. Those guys hate unions. The appalling effort on NPR by Senator DeMint (R., S.C.) to sound like he knew what he was talking about revealed an insane anti-union bias (or perhaps an insane hostility to health insurance for old people, or perhaps simple, blissful stupidity). Greenies looking for an environmentally sensitive auto industry building hybrid vehicles that nobody will buy unless gasoline climbs back to $4/gallon, are probably in the second catagory.

Then there is the 800 pound gorilla. Bankruptcy or bailout, on a go-forward basis the American auto industry will soon be a shadow of its former self. Rather like the steel industry in the 1970s, what emerges from all this will have been diminished in the transition. We're going to have to find a new and different way to add value in the global economy. Better crank up Tom Russell singing about the Homestead works.

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