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The back scratching is finally over, boys.
No matter what they say about their laissez-faire approach to helping support Detroit, make no mistake:
President Barack Obama’s auto task force members have ridden into town like a cowboy in an old Dodge Ram commercial and grabbed Detroit’s dysfunctional auto industry by the horns.
If you have any doubt, don’t just look at how they forced Chrysler into bankruptcy court to take on debt holders who were blocking a plan to save the 83-year-old automaker.
Look at how the U.S. Treasury recently rejected several of GM’s attempts to assist Delphi Corp. — the parts division that GM spun off in 1999 and that continues to supply GM with steering components, electronics, and other critical car and truck parts.
Delphi, based in Troy, lost a total of $5.5 billion in the years after it became independent and before it filed for bankruptcy in 2005.
We’ve been watching Delphi — which employs 146,600 people worldwide and 18,900 in the United States — restructure in court ever since, losing another $5.5 billion in the process. (Grand total: $11 billion in losses.)
For much of that time, we’ve also watched GM coddle its parts supplier.
It seems like Delphi has been kept on a life support drip, so that it was just capable enough to give GM the parts it needed at the lowest possible price.
It was never capable of getting strong enough to succeed and never allowed to get weak enough to fail.
As far as I’m concerned, the spin-off was a way for GM to keep losses off its own troubled balance sheet and push them all onto Delphi, even though they rightfully belonged to GM.
Until now, it seems.
The auto task force is finally clamping down on the coziness between these two companies, which is, really, craziness.
The Treasury rejected GM’s attempts to take back Delphi’s steering business or to give Delphi a $150-million cash infusion, which was aimed at keeping the cash-strapped Delphi operating through May.
This rejection was just one more example of how the auto task force is proving its smarts — despite all the nail biting over whether this team of auto-industry outsiders could quickly grasp the complexities of the auto industry and execute a plan to save it.
While I suspect we’ll hear years of debate over whether Rick Wagoner should have kept his job as CEO of GM — which, as a reminder, lost $82 billion over the past four years — the task force hasn’t made any mistakes that I can see.
What’s more, I think the members have demonstrated a kind of shrewdness that’s been sorely lacking in Detroit for as long as I’ve been writing about layoffs and plant closings here.
While I cringe at the fact the job cuts aren’t over — I’ve been thoroughly exhausted watching tens of thousands of people lose their homes and hopes and dreams — it’s difficult to not give the task force the high marks it rightfully deserves for trying to resolve this misery at its root.
That’s especially true given the highly charged political atmosphere under which the task force is operating.
In talking to industry insiders about how the task force has been performing, many quietly and not-so-quietly praised the group — not only for taking the time to understand the nuances of this suffering industry but for also flexing the muscle necessary to execute a rescue.
Mike Jackson, CEO of AutoNation Inc., the nation’s largest seller of domestic cars and trucks, recently told me that the auto task force members understand what’s wrong and aren’t going to tiptoe around to fix it, as Detroit executives have been doing for years now.
“They understand this is a historic opportunity to fix a broken business model that’s existed for decades,” Jackson said. “They have not shrunk from any of the sacred cows.”
So here’s a shout-out from the trenches: Hallelujah! | 