Is anyone in charge of the auto industry?

December 17th, 2008 at 10:43am Annette LaCross

Published Dec. 7:

Rick Wagoner said he felt “optimistic” after the first day of testimony — a mind-numbing six hours worth — Thursday on Capitol Hill.

I’m glad somebody was.

The General Motors CEO, suitably chastened from the embarrassing debacle in Congress three weeks ago, submitted to two full days of grilling two weeks later, joined by his counterparts at Chrysler and Ford, as well as the president of the United Auto Workers.

The automakers can almost taste the $34 billion in emergency loans they’re asking from the government. And because no politician wants to return to his or her district bearing thousands of lost jobs, from autoworkers to car salesmen, the three companies will likely get their money — as long as those politicians, whose questions to automakers have ranged from the ruthlessly critical to mawkishly sentimental, can convince their constituents that they did not hand the U.S. auto industry a blank check.

They seem to think they can. Hence Wagoner’s buoyant attitude.

I guess I’d feel a little perkier about the whole thing if I were at all reassured that somebody at the car companies had a solid grasp — any kind of grasp, actually — on how business is going. Because I’m fairly certain Wagoner and his compatriots don’t.

In the fall, GM approached Congress about a mere $15 billion loan so it could buy Chrysler. It was having fair to moderate liquidity troubles at the time and had its eye on the $11 billion-plus in cash Chrysler had on its balance sheet.

Those talks ended abruptly the first week of November, when the three automakers reported wretched October sales and GM just as abruptly announced it would not have enough cash to continue operating through the end of the year.

At the time, I thought the timing was a master stroke — infuriating, but a master stroke — coming as it did the day before Barack Obama won the White House.

But let’s give them the benefit of the doubt. It could be just a coincidence that their bank accounts just happened to disintegrate as Democrats prepared to take over Capitol Hill.

Still, somebody please tell me Wagoner and Chrysler CEO Bob Nardelli — whose company has apparently burned through its $11 billion and will close before January — weren’t flabbergasted to learn this. That some flunkie didn’t tiptoe into their respective offices the day before and inform them that they had successfully run their once-respected companies into the ground.

If they were, they need to find a different line of work. But I’ve always thought the guy in charge should have at least a working knowledge of the company’s financial picture. How naive of me.

If they weren’t, they need to find a different line of work. Even humble business editors know you don’t operate a company by hoping the economy will suddenly right itself over the weekend.

Then came November’s sales numbers (also wretched) and the CEOs’ first appearance in Congress. If you’ll recall, they were looking for a $25 billion loan at the time.

Two weeks later, they realized they needed $34 billion in loans or, they told lawmakers sadly, the effects would be “catastrophic” by March.

Do you suppose it really took them two weeks to realize that they had done the math wrong the first time? That they had no idea they would need an additional $10 billion to stay in business for four more months?

In other words, this loan will be the first installment.

One way or another, we’re going to end up paying through the nose for our American-made cars. Even if we don’t drive them.

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