More Dogs on Main Street
It’s been interesting watching the Big Three car makers begging Congress for $25 billion in taxpayer money. That’s in addition to $25 billion they got earlier in the year. Congress tightened the fuel-mileage standards (ever so slightly), and to help the auto makers retool their plants to make smaller cars, there was a $25 billion kicker in the deal. But $25 billion doesn’t go as far as it used to, and so now they are back asking for more.
Their case is basically that nobody could have anticipated the collapse in the economy, particularly the credit-driven part of it. Nobody with the possible exception of Warren Buffet can get a car loan, and sales simply fell off a cliff down 45 percent from the year before. Because they have been losing money for years, there isn’t any financial cushion in the companies, and they need cash now. No bank will lend it to them, no stock market can raise it for them. So the bottom line is that they need $25 billion so they can so they can keep building cars that nobody is buying.
They aren’t getting a warm reception. Senator Testor, the wheat farmer from Montana with the crew cut, pointed out that when Chrysler came begging to Uncle Sam in the late 1970s, Lee Iacocca agreed to work for $1 a year until the loan was paid off. He asked the heads of the Big Three point blank if they would make a similar salary arrangement.
Not on your life! They all seem to think that they have been doing such a bang-up job that they should be getting bonuses and combat pay, rather than getting fired, as they run their companies into the ground. So it seems pretty unlikely that they will get anything from Congress this year. The new Congress comes back in January. There’s no telling what will happen in the meantime.
One theory is that suppliers will start demanding cash payment when they deliver parts, putting greater pressure on the cash-flow problems. People who seem to know what they are talking about are saying there is a good chance General Motors could be bankrupt by the end of the year.
It’s a little hard to imagine that. It’s not like all the Tahoes and Suburbans will suddenly vanish from the streets. The company would keep making cars while the bankruptcy sorted itself out. Delta kept flying while it went bankrupt. But the carnage would be pretty serious as the bankruptcy process eliminated hundreds or maybe even thousands of dealer franchises, whacked pensions and health-care benefits for retired workers, and stiffed suppliers on payments. If one goes down, the assumption is that the other two can’t be far behind, taking out a whole lot of parts suppliers with them. Michigan could be a third-world country in a matter of weeks. That’s not good.
It’s been a long time since GM was really at the top of its game. The 1957 Chevy is still an automotive icon. So is the 1968 Corvette. And then it gets kind of hard to think of a GM car to get excited about. The dark days of the 1970s and ’80s, when the quality was so bad that all three American car companies were the butt of jokes, have passed. There isn’t a lot of difference between the reliability of the domestic and Japanese cars anymore. Quality isn’t really the issue. They made a decision to cede the car market to others and concentrate on trucks and SUVs. That was a fashion trend that ran its course. They might as well be selling lime-green polyester leisure suits.
GM has made a big bet on the Chevy Volt, a plug-in electric car that relies on a battery technology that doesn’t exist quite yet, and will sell for a price that puts it out of competition with existing hybrids. The new Malibu is supposed to be a very nice car, but nobody is buying anything. You can now buy a hybrid Cadillac Escalade that boosts its city mpg from "intolerable" to "dismal." And don’t forget Hummers. It’s tough to see what $25 billion buys other than a little time before the inevitable end of the line.
I don’t think Chevrolet will go the way of the Studebaker, Hudson, or Rambler. Something will survive, probably cranking out full-size pickups that meet a real need. The economic crisis is a real challenge to even the best-run companies. The U.S. automakers have been clueless for the last 40 years, locked into a kind of slow-motion going-out-of-business sale. It’s pretty hard to see why that deserves propping up.
But it’s going to get messy.
As we close in on Thanksgiving in a year when not much is going right, it’s probably more important than ever to take a deep breath and reflect on those things that are working. It’s likely to be a tough year in the ski business, but for those of us who live here and love to ski, it’s a bargain. We’re a little removed from the problems of the broader economy, and people who have been able to take expensive ski vacations probably still can.
We live in an exceptional place. The natural beauty is powerful. The recreation options are plentiful. This is a fully functional community where we have the means, formal and informal, to help take care of each other. The crowd at the fund-raiser for the People’s Health Clinic was big and happy to support a good cause. Everybody I talked to was a little concerned about their own situation, but grateful to be where they were. They were happy to help provide a backstop for neighbors who weren’t as well situated.
When the material side of things looks a little tenuous, I’m thankful for the more important side of the ledger for friends and family, for the bald eagle in the dead tree across the river from my house, for the sunny afternoons, for a big dog who licks my face every morning, and all the other things that really matter.
Tom Clyde served as Park City attorney in the 1980s and is the author of "More Dogs On Main Street." He has been a columnist at The Park Record for more than 20 years.
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