Detroit Marshals for Bailout Bid
Tuesday, November 25, 2008
When Detroit's Big Three automakers return to Capitol Hill next week to re-plead their case for a $25 billion emergency loan, they may be flanked by a posse of supporters.
A plan is taking shape for auto suppliers, dealers and factory workers to caravan from Detroit to Washington in American-made, fuel-efficient vehicles. The National Automobile Dealers Association is considering flying in dealers from around the country to deliver the "message of Main Street," underscoring the urgency of the industry's crisis.
Discussions on the lobbying efforts began last week immediately after the top executives from Ford, General Motors and Chrysler appeared before a skeptical Congress, setting off a wave of anger and frustration within the auto industry.
"It was clear from the comments from the members of Congress that what they knew about Detroit pretty much stopped at 1999," said Peter M. De Lorenzo, a former automotive advertising executive and editor of the Autoextremist.com blog, a must-read for industry insiders. "They regurgitated all the same stuff: Detroit doesn't make vehicles anyone wants. Detroit doesn't have high-tech expertise. Detroit doesn't make fuel-efficient cars."
Detroit-area car dealer Carl Galeana said he was infuriated when a CNBC reporter covering the hearing asked viewers, "Who buys these cars anyway?" Last year, about half of the vehicles sold in the United States were made by the Big Three.
"I wanted to throw my shoe at the TV," Galeana said.
Efforts to mobilize a caravan or other demonstration are still in the formative stages and may not come to pass. The United Auto Workers labor union, for instance, has not formally decided if it will participate.
But the talk comes as U.S. automakers race to craft revitalization plans that they hope will prove to Congress that they are worthy of a $25 billion emergency loan. House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) expect the plans by Dec. 2, and Congress might vote on the loan package Dec. 8.
GM plans on submitting a 10- to 12-page public summary and a more detailed report that would include proprietary information for lawmakers' eyes only, said people familiar with the matter who spoke on condition of anonymity because the documents are still being drafted.
A few lawmakers have been consulting with former Michigan governor James Blanchard, who helped design Chrysler's 1979 bailout. Blanchard warned of waiting too long to act.
In 1979, "as people kept talking about bankruptcy, the sales dried up to nothing," he said. "Washington almost talked Chrysler to death."
In a letter, Sen. Charles E. Schumer (D-N.Y.) called on the Federal Reserve and Treasury yesterday to assist the companies' financing arms to boost auto sales.
President-elect Barack Obama reiterated that Washington should not write a "blank check" to the auto industry yesterday.
"Taxpayers can't be expected to pony up more money for an auto industry that has been resistant to change," he said at a news conference. "And I was surprised that they did not have a better-thought-out proposal when they arrived in Congress. I think Congress did the right thing, which is to say, 'You guys need to come up with a plan and come back before you're getting any taxpayer money.' "
But the opportunity to return to Washington has excited the industry. On Friday, Jason Vines, a former Chrysler executive, wrote a guest column in Automotive News calling for a march to the Capitol. The idea of carpooling was picked up by Dura Automotive Systems, a Michigan auto parts maker. Then fuel-efficient vehicles were added to the budding scheme, gaining momentum over the weekend.
Many are mindful of the impression Detroit's Big Three made on the industry's first visit, when some lawmakers hammered the top executives for arriving in three separate corporate planes to ask for taxpayer loans.
"Maybe this doesn't reach fruition, but Washington needs to get the idea that this affects every small town in America," Galeana said. "A caravan coming from Detroit might be a good metaphor."