Hey Detroit… the check’s in the mail
Today's Financial News - Posted January 21, 2009
Obama has barely warmed up his seat in the Oval Office and Detroit is already knocking on his door. Chrysler and General Motors (NYSE:GM) have already ran through much of the first round of cash we gave them, now they are coming back for seconds. But this time, they tell us even more is on the line.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): Is it just me or does it appear that it is more important for a company’s CFO to be more politically savvy than fiscally smart? After all, financial executives spend more time on the line with Washington than they do with their investors or bankers.
I know I have been picking on Washington a lot over the last few weeks, but nowhere are political moves more obvious than in Detroit. After a month of relative calm, the Big Three are once again revving up their sob stories in an attempt to get some more cash from Uncle Sam.
Yesterday (oddly enough, it was inauguration day), Chrysler and Fiat announce a deal that is touted as a key to Chrysler’s long-term viability. Of course, the life-saving deal will not happen unless Washington gives Chrysler another multi-billion-dollar check. Fiat certainly is not risking its cash on Chrysler’s shaky future. It merely wants a claim of the pieces when the company collapses.
The quasi-merger is political con-artistry if I ever saw it. And now the Italians are getting involved. I can only imagine what trick Chrysler will pull out of its sleeve next. I am sure it will have something to do with saving babies or maybe the bird flu.
Don’t cry for us. We’re already dead…
General Motors (NYSE:GM), while not quite as shameless, is not far behind. The company is making headlines today as it runs around touting the fact it will run out of cash unless it gets the check the Bush administration promised. Of course, it is scheduled to receive $5.4 billion any second, but GM just needs to make sure America knew Wagoner is still monitoring its checking account on an hour-by-hour basis.
Really, today’s news release was little more than a knock on the Oval Office door to let President Obama know Detroit still depends on Washington handouts. Even if Obama is hung over from a night of inaugural balls, he still has checks to sign.
Unfortunately, the other press release hitting the Street today from General Motors is far less politically motivated. In fact, I am willing to bet they do not want anybody in Washington to hear the news that Toyota (NYSE:TM) outsold the former global leader (for nearly eight decades) by over 600,000 cars in 2008. GM’s 11% drop in annual sales, which was nearly three times as large as Toyota’s decline, does not say much for the company’s long-term viability.
While it is still too early for me to claim this is proof of my exclamation that money cannot solve management and operations fallacies, it is one giant leap towards saying I told you so.
Detroit CFO’s have a lot more political maneuvering to do before they get the kind of funds they need to save their hides. It will take more than a few billion dollars to erase a lifetime’s worth of sloppy union concessions.
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