President Obama to Detroit: It's time for "a fresh start." But what does that mean for the sport of NASCAR?
So what does President Obama really think about a NASCAR role in his auto industry recovery plans? (Photo: White House)
By Mike Mulhern
mikemulhern.net
Despite just ousting General Motors' chief executive, President Barack Obama Monday insisted "The United States government has no interest in running GM."
However the abrupt dismissal of Rick Wagoner, the well-respected executive (Duke, class of '75) who has run GM for the past eight years, has shocked not only Detroit but the rest of the car market, including NASCAR's North Carolina base.
Yet during Wagoner's run, GM stock fell from $60 a share to $1.27 a few weeks ago, and Obama says new leadership at GM is needed.
During a 20-minute statement Monday in Washington, Obama laid out his game plan for reviving the American car industry.
And it is very clear that Obama has agendas for both GM and Chrysler, the two car makers on the hotseat (Ford and Toyota have avoided the government's spotlight), and Monday he pushed repeated for "cleaner" cars out of Detroit.
That could well make NASCAR men squirm, because these race cars are certainly not visibly cutting edge at all – 358 cubic inch engines with carburetors, five or six mpg. It took NASCAR nearly 30 years even to make the switch to unleaded gasoline.
And when Obama said he wanted to talk directly with workers in the auto industry, he did not mention North Carolina, even though about 25 percent of manufacturing employment in North Carolina is centered on cars and trucks, and of course the sizeable number of NASCAR-related racing businesses.
Obama himself raised the word "bankruptcy," and appeared to be bracing the American people for a GM bankruptcy – by trying to explain what he envisioned it would be: "A tool we can use, even as workers stay on the job building cars."
"I know when people hear the word 'bankruptcy' it can be unsettling.
"I am not talking about a process where a company is broken up, sold off and no longer exists. And I am not talking about a company that is stuck in court for years….
"But if there are still doubts, let me be as plainly as I can -- If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just as always. Your warranty will be safe. In fact it will be safer than it's ever been, because starting today the United States government will stand behind your warranty."
How Wall Street reacts will be closely watched, of course. Obama's moves are unprecedented, and their impact on the NASCAR world is up for much debate.
Obama's focus on fuel efficient cars and trucks was clear: "The United States will lead the world in building the next generation of clean cars….
"But our auto industry is not moving fast enough in the right direction to succeed….
"GM has made a good-faith effort to restructure…but the plan in its current form is not strong enough.
"But I am confident GM can rise again – provided it undergoes a fundamental restructuring."
Pushing Wagoner out, Obama said, "is a recognition it will take new vision and new direction to create the GM of the future."
Obama said he and his people would be working with GM over the next two months "to produce a better business plan."
And he said GM must now ask itself if it has created "a credible plan not only to survive but to succeed."
Both GM and Chrysler, Obama said, "need a fresh start….
"And that may mean using our bankruptcy code….."
While strongly supporting the future of General Motors, Obama warned "The situation at Chrysler is more challenging.
"Chrysler needs a partner to remain viable.
"Fiat is prepared to transfer its cutting edge technology to Chrysler…and has committed to building new and fuel efficient cars right here in the United States.
"….still such a deal would require an additional investment of taxpayer dollars."
But Obama said that Chrysler was still in an iffy situation, and that Chrysler and Fiat have 30 days to make a deal. If they can, Obama says another $6 billion could be pumped into Chrysler.
Obama said the pending changes and infusion of more money and new faces wouldn't quickly end the pain Detroit has been suffering.
But he spoke to his own working class roots and declared, to the auto workers themselves, "I can promise you this -- I will fight for you. You are the reason I'm here today.
"…I wake up every single morning asking myself 'What can I do to give you, and working people all across this country, a fair shot at the American dream?'"
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GM's official reaction to
GM's official reaction to Obama's speech:
"Today's announcement by President Obama begins a new era for the U.S. auto industry. It also marks a defining moment in the history of General Motors.
"The U.S. Treasury will provide working capital financing for GM for 60 days while GM completes a more accelerated and aggressive restructuring to put the company on sound long-term financial footing. We understand the historic opportunity this presents, and we are fully committed to successfully completing the reinvention of GM.
"As President Obama said today, the success of this reinvention is vital for GM, for the U.S. and global economies, and for the millions of employees, suppliers, dealers, retirees and others who depend on the company.
"During the next 60 days, GM will address the tough issues to improve the long-term viability of the company, including the restructuring of the financial obligations to the bond holders, unions and other stakeholders. Our strong preference is to complete this restructuring out of court. However, GM will take whatever steps are necessary to successfully restructure the company, which could include a court-supervised process.
"The men and women of GM, including our dealers, suppliers and other key partners, know what we must do to accomplish this task. We are fully committed to making this successful. We owe that to the GM community, to our customers, and to the U.S. taxpayers, who are providing support during this exceptionally challenging time."
GM then offered this, attributable to Fritz Henderson, the new GM CEO:
"The U.S. Treasury has said that it strongly believes that a substantial restructuring will lead to a viable GM. Over the next 60 days, we will work around the clock, with all parties, to meet the aggressive requirements that have been set by the Task Force, and to make the fundamental and lasting changes necessary to reinvent GM for the long-term.
"We have significant challenges ahead of us, and a very tight timeline. I am confident that the GM team will succeed, and that a stronger, healthier GM will play an important role in revitalizing America's economy and re-establishing its technology leadership and energy independence.
"The administration has made it clear that it expects GM to expand and accelerate its restructuring efforts. I want the American people to know that we understand and accept this guidance. The road is tough, but the ultimate goal – a leaner, stronger, viable GM – is one we share."
Obama is talking out of his
Obama is talking out of his mind yet again. "Clean" cars are a sham and have been since the 1970s-80s period when the mania for greater fuel efficiency and alternative fuels led to the first "corn" fuels sponsored by Archer Daniels Midland (a notoriously widespread sponsor of such programs as David Brinkley's ABC Sunday Morning show in the 1980s) that went nowhere. The hybrid mania is another example of the "clean" cars sham, as hybrids have proven to be overrated in both fuel efficiency and sales.
That the government has in effect nationalized GM is hardly something to be proud of, considering government is hopelessly monopolistic in its thinking. As for GM's racing programs, we'll have to wait and see on that one, as I'm not sold that Obamanomics will last by 2011 any more than Hillarycare didn't last beyond 1995.
After reflecting on all this
After reflecting on all this for a day or so, I'm getting the feeling that Obama just put the knife in GM's belly. Nobody is going to buy a car from a company that's talking bankruptcy. And the government is going to guarantee your warranty? What kind of nonsense is that? I am becoming worried this guy is in over his head. Maybe Cerberus investors deserve their fate....but what about the poor Joes who work the assembly line? My solution: Anyone who buys a new car this year gets an immediate $5,000 tax deduction...right off the bottom line. Like Billy Jr. once said (to a slow security guard): Move the damned cars!
How perfect, STP 43
How perfect, STP 43 fan,...the voice of NASCAR bogged down in the past, fails to see the real roots of racing: a proving ground for innovation, the manufacturers' show case for their engineering and technology.
GM has failed to address the hard facts for a long time, see the article in today's Wall Street Journal; too many models, too many dealers, too many brands, and a shrinking market share, it's been going on for years, the last 8 of which were run by Wagoner. The world is changing, GM did not keep up; sorry. There's enough blame here for everyone to share, GM, its do-nothing pet-rock board, the UAW,...and many more.
As an engineer I delight in the science and technology of racing; and just as the discovery of oil in Texas in the early 1900's spelled the first demise of steam and electric cars, current work in nano technology is poised to change the energy density of batteries to equal that of gasoline. Then just as the micro-chip put the slide rule people out of business, new inventions along with the decline of all the old oil fields are going to totally transform transportation.
It seems highly unlikely under present management that either NASCAR or GM will be leading us into the future.
Do you spend your evenings studying Chinese? It might be a very good hedge bet.
Robert Yates tried for years
Robert Yates tried for years to get NASCAR to become innovative in engines, but Daytona refused to listen. You're right about GM too -- the company should have put Herb Fishel in charge, and fired Wagoner years ago. I agree that NASCAR needs to take a deep, hard look at the future....but then it should have done that several years ago, when there was money to do things. Now there's no money anywhere. And there is a distinct lack of leadership, just caretakers and ticket punchers. Maybe Jim France should hire Humpy Wheeler to shake things up. Chinese? Funny -- I took Chinese in college at Wake Forest....祝您好运气!
Anonymous, the "too many
Anonymous, the "too many models too many dealers" argument is laughable - it wasn't until their UAW contracts became more and more onerous that GM began having real problems. "New inventions along with the decline of all the oil fields......" Stop. The oil fields not only are not declining but more of them are being discovered, and you put way too much faith in nano technology etc. as over three decades of research into that kind of thing not only has not produced any alternative to the internal combustion engine (nor has it proven "alternative energy sources" like solar or hydrogen to be viable) but has wound up proving the ICE to be better than ever.
The real roots of racing was high speed and the element of danger. The technology argument was exaggeration from the beginning, as costs and absurd performance levels have long forced the banning of technological items such as Wankel engines, turbines (remember Andy Granatelli's STP turbines at Indianapolis?) etc. to where even F1 has begun talking about reigning in its own technology arms race.
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I don't know what's more
I don't know what's more unsettling about this deal: that the Federal Government is mandating how GM and Chrysler are run, or the fact that if they do not step in that there might only be 1 US automaker in business (and Ford is not exactly without their own turmoil). For years American automakers cared more about production than quality, and the foreign competitors made their reputation on just that. Now, when American cars are generally the best they've ever been quality-wise, people are still buying more foreign made cars off of old reputations. What have GM, Chrysler, Ford done to change people's minds? Not a whole lot. What is the United States going to do without a company to make vehicles for its citizens if there is another world crisis? That's more unsettling to me than the fact that the government is getting involved.