Turns out you can issue either ultimata or ultimatums...at least according to dictionary.com.  So, in keeping with my day of poetry (wrote two today), I go with the old fashioned, somewhat rhyming, Obama's Auto Ultimata.

With that bit of tivia out of the way, a bit of background for those not keeping score at home.  We (the U.S. Taxpayer) provided bailout money for two of our Big Three automobile manufacturers: Chrysler Motors and GM.  Despite flying in with his two counterparts, Ford's CEO Alan Mullaly has declined bailout funds.

As part of the deal to provide bailout funds ($19.3 billion to GM; $5.5 billion to Chrysler), the automobile companies were required to come up with a plan as to how they were going to become viable enterprises and to submit that plan to the government--in this case, to the Obama administration's Auto Task Force.

The Auto Task Force was composed primarily of adminstration officials, including Treasury Secretary Timothy Geithner and Economic Council Chair, Lawrence Summers, along with economists and professors, a UAW representative and numerous administration aides for background work.  After reviewing the proposed changes to the way GM and Chrysler do business, the task force and the President decided that neither plan would be able to ensure that we didn't need a second and a third...maybe even a fourth bailout for these companies.

In GM's case, President Obama and his task force determined that with more work to pare unprofitable product lines, the company had the flexible manufacturing infrastructure and enough of a global purchasing strength to turn itself around.  Part of the deal to give GM what amounts to a 60 day working capital loan was the ouster of GM President Rick Wagoner.

There's been a HUGE hullaballoo by Rush and the dittoheads about how asking for better, more specific, more future oriented plans (and the resignation of Wagoner) amounts to government meddling and hubris.  But for those who take the time to read the summary reports by the Auto Task Force, the moves make a lot of sense. 

As to Wagoner, my personal opinion is that he was tone deaf and slow to adapt his company (although, ironically...he was better than Chrysler's head who gets to stay) and he gets a $23 million retirement package.  I think he'll be just fine.

In the meantime, GM has 60 days to amend its plan; prove that its marketing schemes are working and if it doesn't work, the option of bankruptcy--a stick Obama was quite comfortable wielding in his speech on Monday.

For Chrysler, the news was not so good.  The report indicated that their plan was much weaker than GM's.  In addition, they do not have the flexible plants capable of quickly adapting to build new models, nor the global purchasing power that GM has.  In effect, the Obama administration told them they need a white knight (putting Fiat forward as the potential savior of the company via a merger) and that otherwise, they would not be considered a viable company.  Chrysler was given 30 days to come up with a deal with Fiat, along with 30 days worth of operating funds.

Much has been made by conservatives (especially Limbaugh) about how these ultimata are driven by Obama's green obssession.  They claim (erroneously as it turns out) that the SUV's, trucks and behemoths that the Big 3 had pushed were the most successful lines of autos and that consumers don't want little gas sippers, they want big gas guzzlers.

The data do not support Rush's assertion (despite his claim that he's 100% right).  Midsize and large SUV sales are down 57.9% and 58.5% respectively with regard to American car makers.  Small cars, by comparison, were down only 32.3%  And the auto manufacturer impacted the least in car sales to Americans?  Hyundai...with its dependable, small, gas sipping car line.

My opinion overall?  I think Obama's absolutely right when he says we need to have a vibrant, future oriented, innovative car industry in the United States.  I don't believe any of the big 3 are going to get us there without the pain of a reorganizing bankruptcy, although Ford might eke it out.  It's certainly wouldn't be reasonable for us to provide more money to these companies at this point. 

I realize this is in contradiction to my original opinion on bailing out the Big 3.  I thought the problems were less dire and the organizations were more capable of nimble reorganization.  We've saved some jobs in the short term...and if GM comes up with a more achievable plan and Chrysler gets married, we may save some of those jobs for the long term.

But the real source of jobs for the long term is for American car companies to come up with innovative solutions to American travel needs.  Otherwise, they will just be consigning us to oil dependence, wars and aggression over oil rich countries, and an endless stream of bailouts.

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