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Automakers, Unions Play 'Defense' to Get Bailout

     The best defense, the saying goes, is a good offense. In the case of the Big Three automakers, their offense is defense. Chrysler, GM and Ford are pushing for a $25-billion bridge loan by claiming the collapse of their industry would harm national security.


     That was the theme the car-making CEOs brought with them to Washington to beg for help – pay now or pay more later and put the nation at risk as well. Chrysler’s chief executive, Robert Nardelli, told the Senate Banking Committee that crippling the auto industry “would undermine our nation’s ability to respond to military challenges and would threaten our national security.”


     Nardelli and the others weren’t really playing defense, they were just playing games. To support his case, the best he could muster was an archaic example. “Chrysler has long contributed to our national defense. Our Jeep was an indispensable part of our nation’s efforts in World War II and Korea.”

           

     Our parents might call that “grand.” That’s a quaint term from when a grand was real money – about the same time Chrysler was key to the defense industry. This is “grand” with a lot of inflation;spend $25 billion because Chrysler produced a useful vehicle more than 50 years ago. And $25 billion is just a start. GM, for example, is hemorrhaging $2 billion a month. One third of the bailout buys it just four months of life.


     So of course GM is echoing Nardelli’s “defense” claim. The company is devoting a good chunk of its GMfactsandfiction.com Web page to making the industry look needy, including a video that portrays a scary future if we don’t pony up lots of cash. “A collapse would not just be an economic catastrophe but a serious threat to national security,” it states as ominous techno music plays in the background.


     The video at least gives the rationale for that silly statement. “In the event of a broad military conflict, the United States would have to rely on other nations for large scale manufacturing.” That claim follows images of military equipment flashing by on screen. The words are then overlaid on a map of the world, giving the sense that America just can’t handle global military obligations without bailing out Detroit.


     The truth is far different. The Department of Defense says Detroit isn’t a big part of its day-to-day operations. “DoD is not a major driver within the domestic automotive market.  The domestic automotive giants basically exited the defense business in the 1980s, 1990s, and early 2000s,” explains Chris Isleib, a spokesman from the Office of the Secretary of Defense.

     Retired Army Lt. Gen. John Caldwell tells the Associated Press “It's a stretch, quite frankly.” Caldwell, the chairman of the National Defense Industrial Association's combat vehicles division, adds, “I think they’re grasping at straws.”

     No wonder GM words its comments so carefully and makes them contingent on “a broad military conflict.” Yes, if World War III happens, it would be nice to have excess manufacturing capacity. Otherwise the claim is a straw man.


     Even in such an apocalyptic scenario, the U.S. still has ample capability in other auto plants run by Toyota and Honda. According to Toyota, when new plants open in Ontario and Mississippi, it will have 15 North American manufacturing plants with the “annual capacity to build approximately 2.2 million cars and trucks.”


     Too bad the mainstream media are so enamored with their own agendas to really put Nardelli and the others on the defensive for this bogus argument. The Big Three networks are still a long way behind Detroit’s Big Three in their own collapse, but they are very supportive of an auto bailout. Most of their criticism was of the CEOs’ “greed” for flying three separate private jets to Washington. Between Nov. 1 and Nov. 18, ABC, CBS and NBC aired 31 stories with a pro-bailout tone, almost three times as much as balanced stories – only 12.  Just one story was critical of the plan.


     This issue desperately needs some balance. Top Democrats certainly are worried about defense; not America’s, but one of their prime constituencies – the United Auto Workers union.


     The automakers go on the offensive again soon. According to the Nov. 22 Washington Post, “House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., sent the automakers a letter calling on them to submit ‘a credible restructuring plan’ by Dec. 2.”


     That means they’ll fly back to D.C., probably Coach this time, to try the same tired strategy and ask for at least a $25-billion bridge loan. If they hurry, they can catch Alaskan Republican Sen. Ted Stevens before he leaves town and he can explain the difference between a bridge and a bridge to nowhere.


Dan Gainor is The Boone Pickens Fellow and Vice President of the Media Research Center’s Business & Media Institute.