What you need to know about Ohio Politics and Policy
Automakers that got no benefit — Honda, Ford, Toyota and others — either supported the auto rescue or had no formal position. Their rationale was that liquidation of a major company such as Chrysler or GM would send shockwaves through the companies that make auto parts, leading to a wave of bankruptcies. Many of those suppliers serve multiple automakers, leaving the remaining players to scramble for new sources of parts. “Our position was quite consistent throughout, and it really stems from the fact that there is an integrated supply chain in this industry,” said Ed Cohen, Honda’s chief lobbyist in Washington. His company has 13,500 employees in Ohio. Our suppliers “would have had a very difficult time maintaining our operations,” he said. “It would have had a devastating impact on a lot of them.”Well, you say, you’ll grant that the stakes were high, but why couldn’t GM and Chrysler have simply done a regular bankruptcy reorganization with private financing? Here’s what auto execs told Gearino:
In the boardrooms of Chrysler and GM, there appeared to be no doubt about the policy. Bob Lutz, vice chairman at GM during the auto rescue, thinks the political debate is largely based on a misunderstanding of what happened. He scoffs at critics who say GM and Chrysler should have gone through a more traditional bankruptcy, one that would have involved private financing. “Of course we went to the banks to see about refinancing,” said Lutz, who is now retired from GM. “The banks said, ‘Don’t look at us. We’re broke, too.’ Everybody forgets that.” Sergio Marchionne, CEO of Chrysler, said during a talk in Columbus last week that it “would have been impossible” to do an orderly bankruptcy with private money. “Nobody would have bet a dollar on our survival,” he said.There was no policy playbook in place for what happened to our economy in 2008 and the first half of 2009. It’s easy to second guess a lot of decisions that were made during the financial crisis by both the Bush and Obama administrations. One thing you can’t second guess or change is facts. And the facts tell us that the auto rescue worked.
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