GM, Ford - Won't Pledge to Buy American

Monday, 8 December 2008, 11:04 am
Column: Michael Collins

GM, Ford - Won't Pledge to Buy American

Sen. Sherrod Brown (D, OH) asking GM, Ford, and Crysler,
'Will you buy American if we give you taxpayer dollars?'

Michael Collins
"Scoop" Independent News

(Wash. DC) The CEO's of General Motors, Ford, and Chrysler were in the Capitol Thursday asking for $34 billion dollars to stay in business for the next few months. The three companies are now at the top of the corporate "dead pool," with a bankruptcy for GM possible by the end of the year. They appeared before the Senate Committee o Banking, Housing, and Urban Affairs.

Senator Sherrod Brown (D, OH) provided one of the most telling moments when he asked the three chiefs to commit to continued purchasing from United States automotive suppliers at the same or increased levels in return for federal bailout funds.

Suppliers for GM, Ford and Chrysler are located across the country. A GM bankruptcy would resonate through the aftermarket, original equipment (for new cars), and heavy duty parts suppliers creating broad based economic hardship.

The following transcription shows clearly that both GM and Ford failed to commit in any way to Brown's goal - a firm commitment to buy American if they receive taxpayer funds.

U.S. Senate Committee on Banking, Housing, and Urban Affairs, Dec. 4, 2008 (311-313)

Sen. Brown: "Auto suppliers, of course, as auto companies, have a lot to worry about these days. One of the concerns is that tax payer dollars will go into this program and their concern is that they not be used to off shore American supplier jobs … I'd like just a yes or no on each of the three CEOs, for you to commit and pledge to maintain or increase your US value added content …if you receive taxpayer supportboth for your companies directly that you will increase to increase or keep the same on the value added content and on your suppliers that you use if you'd commit to that if you receive tax dollars."

G. Richard Wagoner (GM): "I have to look at the data. Certainly our intention … we're finding that the U.S. suppliers are more competitive today in a lot of areas than they've been in years. I feel like that will be the direction but I'd like to look at the data and respond to you if I could."

Where's the commitment to anything other than a "look at the data" and a request to respond later on? There is no commitment to buy American. He was headed in that direction when he said, "Certainly our intention" but then he caught himself and answered with a platitude. On the verge of bankruptcy or worse, GM, the major beneficiary of the bailout, is telling the Senate and the citizens, 'Gee, I can't answer that question right now.' No promise will follow unless the data looks right. You'd think that he would know the data, particularly for this hearing.

Alan Mulally (Ford): 'The vast majority of our research and development is lead out of the United States. And we have no plans to change that.'

Ford's CEO must have been distracted when Sen. Brown asked his question.

Sen. Brown: "Not just research and development. I'm talking about more than just research & development. I'm talking about everything you do. The concern that I hear from so many people because they've watched what happened to the banks; they watched money go for all kinds of purposes, including buying other banks. Lets put that aside.

They want to make sure that this money is used for American suppliers in the United States, whether it's suppliers whether it's directly with Ford."

Alan Mulally (Ford): "I understand and we operate as you know all around the world in the markets and our plan is to profitably grow our operations in the United States."

Ford's CEO is a bit less dismissive than GM's, but more defiant about failing to make a pledge. There is nothing in this sentence that would indicate a commitment to Brown's buy American standard. Ford's profitability has to do entirely with Ford. That outcome provides no standard that can be interpreted as the intent to buy form U.S. suppliers or even to favor its own supplies operation.

Robert Nardelli (Chrysler): "73% of our sales are in the United States. 61% of our production is in the United States. 74% employees are in the United States. 78% of our materials purchased come from the United States. So we … are the quintessential American company."

Sen. Brown: "But 100% of these dollars will come from U.S. tax payers."

Robert Nardelli: "I understand that sir. And I couldn't agree with you more. We have to make sure as we work toward gaining independence on oil, we can't become dependent on technology."

Nardelli's two part answer is the closest to a commitment to buy American. He even offers rationale for that commitment. For this, he earned the only follow up comment by Sen. Brown.

Brown: "People will be watching."

People have been watching. If they were watching the hearings, just the few moments when the CEO's answered the clear question by Senator Brown, they realized that GM and Ford offered no commitment to buy from U.S. suppliers at the same or increased levels in return for U.S. taxpayer funds.

Another thing that the people watching learned was that the United States Senators simply can't ask follow up questions after receiving clearly evasive answers. The equivocating answers by Wagoner and Mulally showed bad faith and intent to avoid a necessary promise. Brown asked the right questions. Why couldn't one other Senator have followed up?

When the GM's Wagoner talked about how competitive U.S. suppliers are then punted with 'I'll get back to you,' it would have been nice to hear this:

You didn't answer the question. Your company is about to go under. Hundreds of thousands will lose their jobs. Why can't you commit to the same or increased level of business with U.S. suppliers?"

When Ford's Mulally responded with his carefully parsed statement about Ford seeking profitability for its U.S. operations, it would have been nice to hear:

That's the second time you failed to answer the question. Why won't you commit to equal or greater business with U.S. suppliers in return for taxpayer funds?

Why won't they make the commitment? Because they don't have to. They think it's worth risking congressional support by offering up these insults masquerading as answers. If they were really serious (or smart), they would have stressed the positive impact on the secondary market and the dire consequences should the bailout be denied.

In the final analysis, the risk was worth it. Nobody on the committee seemed to notice.

A failure to bailout the automotive industry in a way that's fair to auto workers and suppliers risks the outcome presented by the U.S. airline bankruptcies or the absolute chaos of an industry collapse. But then again, anything is possible when Congress and the chief executives of major corporations come together to solve a problem, one that they created.

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