- The Washington Times - Monday, June 15, 2009

ANALYSIS/OPINION:

President Obama promised that the core business decisions of flailing domestic automakers wouldn’t be subject to the whims of Washington. But some in Congress are treating General Motors Corp. and Chrysler LLC like military contractors that can be bullied as a precondition to receiving further federal largesse.

House Financial Services Chairman Barney Frank recently called General Motors CEO Fritz Henderson in a successful effort to delay the closing of a parts depot in the Massachusetts Democrat’s home state. Mr. Frank later denied that his effort would lead to other attempts to influence automaker business. But his efforts reflect the congressional attitude that the surviving parts of Detroit’s automakers are spoils to be divvied up. This political interference undercuts the ability of these failing firms to do whatever it takes to survive.

Bloated dealer networks long have been a drag on the manufacturers’ bottom line. Nevertheless, top GM and Chrysler executives were forced Friday to defend their decisions to close about 2,000 dealerships across the country. Freshman Democratic Reps. Dan Maffei of New York and Frank Kratovil Jr. of Maryland have introduced legislation to prevent the termination of franchise contracts.

U.S. auto sales have fallen to less than 10 million a year from a 2005 high of 17 million. A web of state laws forces automakers to buy out any dealers they sought to close, a financial impossibility for the troubled companies rectified by their bankruptcy proceedings. “Today’s automotive industry cannot support the number of dealers currently in the marketplace,” Chrysler President James E. Press explained Friday. Still, the companies are called on the carpet for trying to address the problem.

Other recent political interference includes deciding what cars GM will build and where the plants will be that will build them, placing restrictions on GM’s possible sale of foreign imports, and stipulating where business offices can be located. Michigan’s senior congressional members and Detroit Mayor Dave Bing claim Mr. Obama promised them that GM wouldn’t move its Detroit headquarters to the tech center the company owns in Warren, Mich., even though the move could save the company millions in tax payments.

Responding to criticism that the government will end up owning 60 percent of GM after bankruptcy, Mr. Obama said the federal government will stay out of “all but the most fundamental corporate decisions.” He would have a hard time getting Congress to agree to that.

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