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Mich. Congressman: Only Thing Worse Than a GM-Chrysler Deal Is No Deal

Posted Oct 21, 2008 08:26am EDT by Aaron Task in Newsmakers, Recession

Those anxious about a potential GM-Chrysler merger are probably breathing a sigh of relief: The WSJ reports financing may not be available for the proposed deal.

But "the biggest concern is if there's not a merger," says Rep. Thaddeus McCotter (R-Mich.), who notes private equity firm Cerberus Capital Management -- which owns a majority stake in Chrysler -- has said it doesn't want to be involved in the auto industry.

"If there is no merger you could see the entire Chrysler car company destroyed, disbanded and thousands of Americans put out of work," Rep. McCotter says. He's also not too keen on the possibility of Chrysler being sold off in parts, another possibility reportedly being discussed.

"If there is no merger... and if Chrysler is sold off in pieces and people lose their jobs, we have to make sure there's an adequate safety net there so they can be retrained so they can be productive members of our free market society," the Congressman says.

That said, Rep. McCotter is very clear he doesn't believe the government should try to interfere with the free market process, or that the government's $25 billion loan to the auto industry is a bailout in sheep's clothing, as discussed in the accompanying video.

(Click here for part one of my interview with Rep. McCotter, where we discuss his ongoing opposition to the Wall Street bailout.)

188 Comments

Scott S
Scott S - Tuesday October 21, 2008 08:48AM EDT

The US auto industry is a dinosaur. The US auto industry has a 1970's mindset and technology. Industry has not changed it management structure to reflect todays market. The 70's technology that is still trying to sell in this market just doesn't cut it. The tax payers are not responsible for funding poor business decisions. As for the US auto workers, they are spoiled blue collar workers who are used to making 50k a year for driving a forklift who are about to be driving forklifts at homedepot for 9 dollar an hour. Quit interfering with capitalism or move yourself to one of the nice socialist european countries.

sportsmadness
sportsmadness - Tuesday October 21, 2008 08:49AM EDT

OMG over 30 years ago I witnessed while in high shool the need for more efficient cars. Its Detroits own damn fault for not building better economical cars. They seemed to be run by the same knuckle heads as the mortgage industry. Better late than never I guess. Maybe now they will get the picture and build better not lazy and fatter. "Hello McFly Auto Industry"

Roy d
Roy d - Tuesday October 21, 2008 08:51AM EDT

privite eqity firms are famous for skimming the gravy off the top and throwing away the rest - Where was McCotter when this deal went down with Damlier? Another case of a reative goverment instead of a proactive goverment. VOTE OUT ALL INCUMBANTS NO MATTER WHAT PARTY!!

cootiegiver
cootiegiver - Tuesday October 21, 2008 08:52AM EDT

Detroit needs to realize that what it's been doing doesn't work. Close factories, reduce your operation to a level where it makes a profit. The goal of business must be to maximize profit--not to maximize employment. When you put the cart before the horse, this is the inevitable result. That means that the union is just going to have to let management make the tough decisions that have to be made. If it means short term layoffs, then so be it. In the long run, profitability means more jobs. Unprofitability means no jobs.

sportsmadness
sportsmadness - Tuesday October 21, 2008 08:54AM EDT

Before I got a Toyota Camry, I owned a Exxon Valdez Buick Century. It nickled and dimed me to death. A testimonial to the quality of GM. I will say that the Cobalt is ok from feedback my son gives me. To aquire Chrysler crap wont cure any problems. I owned a Chrysler Town and Country. That is the biggest transportation rip-off of the century. Can you believe that in the owners manual it states you cannot run anything but the lowest grade fuel or you will stall the engine. Belive me that is true because it happened to me.

Micky D
Micky D - Tuesday October 21, 2008 08:57AM EDT

Funny how these pseudo conservatives are all for the free market except when it comes to the voters in their district. He voted for the auto loan bailout. Hypocrite. Cerberus can do what it wants with their assets. Who is suppose to pay for this retraining and safety net? This guy needs to stay on his schizophrenia medicine.

cootiegiver
cootiegiver - Tuesday October 21, 2008 08:57AM EDT

Management of the auto industry sucks, but it's not surprising given that the number one qualification for being a manager in the auto industry is that you must be defferential to the union. GM could make vehicles that compete with those made by the Japanese, but if they did, they would cost 1/3 more since GM's labor costs are 1/3 higher than the Japanese labor costs. The only segment of the market that GM can compete in is the one that the Japanese don't want to be in--the low quality, low mileage, poorly designed and engineered segment of the market.

brian b
brian b - Tuesday October 21, 2008 09:07AM EDT

Hard to compete with one sided trade agreements. Over head for the big 3 is much greater, because they provide pensions, quality health care, etc. Transplant foreign automakers do not. Foreign car owners will argue that their vehicle is built in the USa, but the reality is that only about 1/2 the volume is assembled here. The rest are imported in.

Yahoo! Finance User
Yahoo! Finance User - Tuesday October 21, 2008 09:08AM EDT

Have you all forgotten that the unions have driven US business out of business when it comes to competing with other countries. The union worker no longer has pride in workmanship and the union leaders collect the dues and screw their members. At one time they served a purpose, now they are just an anchor holding back progress. Worse, management is too weak to fight them.

sportsmadness
sportsmadness - Tuesday October 21, 2008 09:09AM EDT

Hi Dave .... we both have the same name posts. I agree with your view on the auto industry. Sad but true is the reality of our industry which out flanked the world 30 years ago. The Japanese even have a better assembly line production method. We still have old time technology there. I saw a story on TV on the Japanese assembly line. Impressive that it is in tune with the safety and reliability of the workers. They even make management decisions on the line if things are spotted going south.

James H
James H - Tuesday October 21, 2008 09:19AM EDT

I have seen the fall of the Buick plant being a resident of flint and the cause and effect on the community. This so called "merge" is going to make the suburban area of Detroit such areas as Auburn Hills, Farmington and Bloomfield, where all of these workers and high level executives live become such a place as flint...just another poor city on the map.

Danny
Danny - Tuesday October 21, 2008 09:20AM EDT

But I like working for GM making 60K a year installing seats all day long. With overtime, I made 110K last year. The unions allow me to sit around when I have no work to do because I have to be on the line.

Daniel
Daniel - Tuesday October 21, 2008 09:20AM EDT

The issue isn't totally labor related. Honda, Toyota, BMW, etc. can manufacture high quality, cost effective, fuel-efficient cars in the US utilizing US labor. The issue is design not assembly. Until the US auto companies can design cars that meet customer expectations they will never survive. They will continue in the death spiral in which they are caught.

kerry b
kerry b - Tuesday October 21, 2008 09:25AM EDT

Looks like the Michigan politicians are thinking,as usual, only of themselves and their $135 per hour UAW workers (Oh, don't mention union wages). This is the logical result of high labor costs , costs that have been forced on consumers for the past 60 years. Mighigan has benefitted from the rape of the American car consumer, now its time for them to get some payback. I hope Michigan loses all of its fraudulently salaried , uneducated, unskilled union workers. Let Michigan pay the wages of those pirates. Screw Michigan.

RED G
RED G - Tuesday October 21, 2008 09:25AM EDT

I have a good buddy working a chrysler in rockford, he states they are still making 500 cars a day!! They also have thousand of cars on the lot that are not moving. What is going on with management?

Adam
Adam - Tuesday October 21, 2008 09:29AM EDT

The blame for the US automakers problems isn't purely with the management, unless you know that the unions are the true managers. There are many efficient principles that they have put in place in factories outside of the US that are quite revolutionary, such as building and leasing factory space to major supplier (fuel systems, interiors, etc) so that the transportation and inventory costs are almost zero and paid for by the supplier. The problem is that the UAW won't allow this practice in the US. I'm so glad I grew up in the south and didn't have to deal with unions and their rhetoric. "Never underestimate the power of stupid people in large groups"

carla
carla - Tuesday October 21, 2008 09:30AM EDT

This is just another example of how our country and our government rewards poor management and poor planning. Case in point Ford is releasing a mid size sedan in 09 that gets 60 MPG, but it will not be sold in the united states. The auto industry needs to wake up, lay off 50% of thier employees and let the other half know if the presence of unions continues they can start looking for new jobs. $30 an hour to put two screws in a door is a bit much for almost completely unskilled labor. If our govt. is going to actually help our country, instead of their own interests and the interests of their personal friends, we need to nationalize all domestic energy production, since most of the oil produced in this country is on public land, cut out the traders on wall street and sell our oil directly to the refineries @ 15-20% below the market price and have a plan to rid our country of oil over the next 10 to 15 years. Enact legisation that over the next 4-5 years all new vehicles are required to get 40 or more MPG than they do now (60 to 80 MPG is reasonable) and 50% of each product lines need to be alternative fuel vehicles (natural gas, hydrogen, electric). Im sure if local community colleges can build all electric and hydrogen powered vehicles for class projects the auto industry engineers can figure it out. In the mean time Americans should wake up and realize that we dont have to stand for this, pay attention to advertising 90% of all ads are false and misleading so we should refrain from buying anything except for the basic necessities until these companies and others develop a corporate conscience to do whats right, not for what creates quick profits so they can get rich screwing the consumers.

kdizz_24
kdizz_24 - Tuesday October 21, 2008 09:33AM EDT

Does anyone on here no what they are talking about GM has some of the best fuel mileage vehicles out there. And will has more hybrid vehicles than anyone other auto manufacturer. Sorry to say it but they have advanced there technology quiet a bit since the 70's. I bet you all would have a different tune if you actually had a GM Car, not only that but friend or family in that industry that does supply alot of families with things like jobs, medical insurane, and retirement. It's time our people in our country start spending their money in our country.

kdizz_24
kdizz_24 - Tuesday October 21, 2008 09:33AM EDT

Does anyone on here no what they are talking about GM has some of the best fuel mileage vehicles out there. And will has more hybrid vehicles than anyone other auto manufacturer. Sorry to say it but they have advanced there technology quiet a bit since the 70's. I bet you all would have a different tune if you actually had a GM Car, not only that but friend or family in that industry that does supply alot of families with things like jobs, medical insurane, and retirement. It's time our people in our country start spending their money in our country.

Ashli
Ashli - Tuesday October 21, 2008 09:36AM EDT

Its not right that thousndans shoul be put out of work because of wrong business decissions on the part of GM. But on the other side how many nay saiers are driving big gas guzzling cars and trucks. The Auto industries are meeting demand. I for one drive and SUV not a large one , but still one non the less. Its every ones fault, right down to this credit problem. WE have all allowed this to happen from over extending our credit to the cars in our drive way and the sooner we own up to our part in this the sooner we can fix it!

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