The Auto Channel's EVP Responds to Statements Made by Michigan Congressman Thaddeus McCotter - VIDEO ENHANCED
AUTO CENTRAL – April 9, 2009: Yesterday, Michigan Congressman Thaddeus McCotter was interviewed by Yahoo! Finance's Aaron Task and Henry Blodgett about the auto industry and the current economic situation. The interview can be watched by clicking on the PLAY button in the window below.
The following is Marc Rauch’s response to Congressman McCotter’s remarks:
Michigan Congressman Thaddeus McCotter is the epitome of what happens when you ask someone their opinion and they don’t have the qualifications to give it to you.
The reason as to why McCotter is unqualified to provide an informed opinion is unclear to me, as I don’t know enough about his background. However, his comments are off-the-mark, misinformed, and counter-productive to “our” attempts at finding a solution to the current economic depression. Unfortunately, his puerile comprehension of the root problem is the best that can be expected from politicians that have little or no practical business experience (which is then compounded by appointing inappropriate people to positions of corporate leadership). Wagoner, Mulally, and Nardelli are completely the wrong people for their respective jobs and responsibilities. What was needed, and was lacking for many, many years in Detroit was leadership from people real track records of successful hands-on experience in product development and marketing. Ford, Chrysler and GM’s inability to become competitive wasn’t because they couldn’t make their bad or lackluster products cheaply enough; it was because they didn’t have the products that the public wanted to buy.
To the question “How did we get here (the state of virtual collapse in the American auto industry)?” McCotter replies by stating that the car companies have been slowly working towards making themselves more competitive, but that the sudden or unexpected rise in CAFÉ mandates was the primary cause for the financial downturn. He then adds that the inability to get credit was the final blow.
Firstly, the American car companies first became aware of the increasing competition for foreign automakers in the late 1940s and early 50s. That’s 60-ish years ago. With that kind of slow reaction time GM, Ford and Chrysler are lucky that they didn’t go dark decades ago…they certainly deserved it. So to even pretend that there has been any real effort to slowly become more competitive is a farce (the Pontiac Aztek, Hummer and Cadillac Catera are some of the more obvious recent examples of bad management judgment; the Gremlin, the Pinto and the Maverick go further back). I presume that McCotter overheard someone at a urinal professing that explanation and he felt it had “legs.”
Next, who could be caught unaware or surprised by stringent CAFE mandates, unless the surprise that McCotter is implying is that the government actually tried to do anything at all to correct two increasing problems: the environment and foreign fuel reliance (I’m not suggesting that the CAFE mandates were right or sufficient or even well-intentioned, just that a stand was taken). Many years ago, a soft drink beverage company was faced with an enormous problem: its key ingredient was universally declared illegal. But removing cocaine from over-the-counter availability didn’t stop the production of Coca-Cola or limit its success. The company changed its formula and has remained the leader in its field for more than one hundred years.
Detroit could have, should have, used the growing environmental and foreign fuel problems to its advantage to build and sell cleaner alternative fuel products and make the “imports” the bad guys. Instead, they merely subverted the “intention” of the bill by finding ways to sell more gasoline-guzzling vehicles and make higher profits from the idiotic CAFE averaging rules. And now McCotter would like to make those politicians that voted for CAFE the bad guys (they may indeed be bad guys, but they didn’t become bad solely from supporting CAFE).
To use another soft drink analogy to illustrate how Detroit could have used posed foreign cars as the bad guys to their advantage, I point to 7-UP’s clever marketing device of citing its beverage as being “de-caffeinated” in a sea of evil caffeine competitors. Overnight, 7-UP turned caffeine into a perceived poisonous substance, even though caffeine is harmlessly consumed by billions of people everyday (in fact, caffeine is even an important ingredient in medications that make some lives livable).
If Detroit car makers did their jobs the “Bush $80 billion CAFE mandates” would have never been an issue.
As to the “credit crisis” being a significant factor in hurting any car maker, regardless of nationality, this is a preposterous assertion. The credit crisis only became as bad as it did because of the participation by the auto industry in creating the problem by: 1) fabricating erroneous application materials, and 2) developing loan packages and instruments that were un-secured. A lot of unqualified people were herded into buying a lot of overvalued iron.
Incidentally, contrary to any upside implication that McCotter makes in saying “Only Ford was able to stay ahead of the curve;” Ford has only been able to stay away from accepting a Federal bailout (so far) because they raised so much money from selling off assets last year (funnily enough, this is about the only thing that Mulally is good at, however Ford business is not in selling its assets, its business is to build and sell automotive products).
When asked what should be done about the situation, McCotter responded by talking about improving the community colleges, lower taxes in Michigan, and trying to stop the brain-drain of the “best and brightest” in Michigan from leaving. While I agree with those ideas, they’re not the solutions to our economic depression. When asked again, “What should the governments (Fed and State) do specifically about GM and Chrysler?” McCotter said, “They’ve already done it, they’ve given the GM 60 days or go into bankruptcy, they’ve given Chrysler 30 days to merge with Fiat or go into bankruptcy…”
McCotter’s comments are not suggestions of possible solutions; they are merely aimless thoughts of what might be. One thing is clear; we need our political and business leaders to be the best and brightest in America, not the greediest and most power-hungry. Get out of office if all you’re doing is sucking in good air and venting out stale.
Now if you ask me what should be done I’ll suggest you visit TheAutoChannel.com. My partner, Bob Gordon, and I have it all figured out….sort of.