This is the 2009 Ford Shelby Mustang GT 500. I want this car. When I was in high school I wanted the 1967 Shelby Cobra GT 500. Lunchroom debates raged over the merits of the Shelby Cobra vs. the Corvette Stingray. In my mind, it was no contest, even if Motor Trend was clearly in the bag for GM. I’d even be happy with the GT350 – then or now – ’67 or ’09. In the bailout debate, I keep seeing commentary that Detroit does not build cars that people want to buy. I am here to bear witness that this is simply not true. I want this car. My wife won’t let me have one, but I want it. Who knows, I may still get one some day. Just sayin…
With so much negative sentiment about the “Big 3” and the bailout, I thought I should start this post with something positive. I’ll have even more positive things to say about Ford later, but first – the bailout. Not much positive there. On Wednesday, the House of Representatives voted 237 – 170 to pass the Federal Auto Loan Bill. Friday, the Senate failed to reach the needed 60 vote threshold to pass the bill by a vote of 52 “for” and 35 “against”. 10 Republicans voted for it. 8 Democrats did not vote for it. It failed by 8 votes. Somehow this was widely reported as Republicans blocking the bill. Go figger. Personally, I don’t care how it got stopped as long as it did.
For at least one GM retiree, Michigan resident and blogger, the failure of the bill could only be blamed on one thing – Senator Richard Shelby and the State of Alabama. Of course. His call for a boycott of Alabama, has actually garnered quite a bit of media coverage. Of course.
Then late Friday we learned that our lame-duck President and the Bailout Czar (in yet another extra-constitutional working weekend maneuver) are going to give them our money anyway. Quite a roller coaster ride.
Stephen Green at Vodkapundit sums it up nicely (Warning – Green’s graphic includes gratuitous use of the “s” word):
The merits of a “Detroit 3” bailout has been debated here at Donklephant ad nauseum. Since I have already weighed in, I won’t repeat those arguments here. But there is one point that seems to get lost in all the discussion and is even reinforced in Green’s otherwise brilliant ad spoof.
The question should not be framed as whether the “auto industry” or the “Big Three” should get taxpayer money. The point is that these three companies are not the “auto industry’ and are not even the “domestic auto industry”. Arguably, Toyota makes cars with more American content and labor than do any of the “Big 3”. Moreover, the “3” are not monolithic, do not have the same operational structure, do not have the same financial needs, do not make the same cars, do not have the same competitive status and they should not be lumped together in this debate. These companies are competitors. So instead, lets consider them separately.
GM is a basket case, plain and simple.
- In 2007, Toyota sold 9.37 million vehicles.
- In 2007, General Motors sold 9.37 million vehicles.
- In 2007, Toyota made $17.1 billion.
- In 2007, General Motors lost $38.7 billion.
GM has massive manufacturing overcapacity in workers and plants compared to to the number of cars they have sold recently, are selling now, or have any realistic expectation of selling in the foreseeable future. Nothing short of a chain saw restructuring can make them viable. It is not the kind of cars they make. It is not their quality. It is their business model. It is their labor costs. It is their excess capacity. The only rational way they can accomplish the radical restructuring they need will be under chapter 11 bankruptcy protection (as recommended by Nobel prize winning economists). Every penny they get from the taxpayer between now and that inevitability is money thrown into a bottomless pit.
Chrysler was taken private by Cerberus, which is one of the richest and best connected private equity firms on the planet. Doug M and Michael W at QandO have been beating the drum on the Cerberus issue for a couple of weeks. The story is getting some traction in the mainstream media and other blogs. This example from Forbes and the NYT:
“Buried on the business page of The New York Times Saturday were the details of Detroit’s biggest snow job yetâ€”literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush’s second Treasury secretary, is leading a who’s who of crony capitalists in a lobbying campaign for a taxpayer bailout to “salvage Cerberus’ investment in Chrysler.”
That’s right. Not to save the jobs of Chrysler employees or America’s disappearing manufacturing base, mind you, but to prevent “one of the world’s richest and most secretive private investment companies” from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers.”
This stinks to high heaven. The Kabuki theater in Washington has nothing to do with “saving Chrysler”. Nothing. It has everything to do with asking taxpayers to bailout the Cerberus investors and save them from extending any additional risk to support their own speculative investment.
That brings us to Ford, and a ray of hope. Don’t get me wrong. Ford CEO Alan Mulally did not cover himself or his company in any more glory than the rest of the bozos in either of his two appearances before Congress. But this week, with the help of the great-grandson of the man who founded the company, Ford finally got it right:
“Chief Executive Alan Mulally and Executive Chairman Bill Ford Jr. told The Associated Press on Tuesday they are confident that the borrowing, coupled with restructuring and new product plans, will get them through the recession without relying on the government. Ford even said the century-old company that bears his family’s name might be able to use the independence from loans to its advantage. I think if they see Ford as a company trying to pull itself up by its own bootstraps, and making it on its own and pulling the right levers, I think that could be a positive for us,” Ford said.”
Proponents of the bailout bill make much of the argument that consumers will not buy a car from a company operating under Chapter 11 protection. Given the publicity of this debate, and the indisputable fact that this bridge loan will do nothing more than bridge the time until GM asks for much more money in March, that argument is becoming moot. Would you buy a car from a basket case of a company that refuses to face reality and take the strong medicine they need to survive? From a private equity firm without the balls to back their own investments? Or from a company that has already taken the right steps, has figured out a plan to weather the storm, and also happens to make some really great cars? A company like Ford.
If Ford declines the taxpayer money, Ford deserves the support of American car buyers. If GM and Chrysler take taxpayer money, they do not deserve the support of American car buyers.
Polls show that a majority of Americans oppose taxpayer dollars being used to support the Detroit 3 bailout. Perhaps a better idea than boycotting Alabama, is to boycott any company that takes taxpayer funds against the wishes of the majority of American taxpayers.
In my dreams, Americans take matters into their own hands. In my dreams, Americans begin to apply the discipline that our representatives in Washington and our President did not. In my dreams, Americans vote with their wallets and stop buying products from any company that solicit government bailouts. This might be tough to do with the banking industry which has effectively been nationalized, leaving few choices. But it is certainly something that Americans can do when choosing to buy a car between Ford, Chrysler, and GM.
I drive a 1999 Jeep Cherokee that I purchased new from a Dodge/Chrysler/Jeep dealer ten years ago. I thought I would replace it next summer. With all the great deals being thrown around, I may move that purchase up. I love that Jeep, it has been a great car for me. But if Chrysler/Cerebrus takes Federal money – I won’t buy another Jeep. If Ford declines the loan, I’ll be a Ford man now.
FWIW – in a small token of support for Ford doing the right thing – I thought I’d show them some love and offer up some of Justin’s blogspheric real estate for a little free advertising. This is a great American car company that builds great cars, is capable of making tough decisions in a tough market, and can run an automotive business without picking the pockets of the American taxpayers. Unlike GM. Unlike Chrysler.
Boycott Chrysler/Cerberus. Boycott GM. Buy a Ford.
Ford Shelby Mustang GT 500
Need a truck? Consider the ….
Ford F150 Pickup Truck
Going off road? Consider the …
Volvo XC70 SUV Crossover
I’m going to look at this one to replace my Jeep.
Going green? Consider the …
Ford Escape Hybrid
The Ford Shelby Mustang kicked the GM Corvette’s butt when I was in high school in 1967, and with the decision to decline government bailouts, Ford is still kicking GM butt today.
X-post excerpted from “Divided We Stand United We Fall“