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The Moving Target: U.S. Automakers Are Never ‘Saved,’ Just Reprieved

Bill Koenig
By Bill Koenig Senior Editor, SME Media

Last week, during an interview on the public radio show The Takeaway, I fielded an intriguing question. “We’ve been trying to quote, unquote save the auto industry for years now… In your estimation are we trying to save something that’s just never going to be saved?”

I gave a technical answer. But I keep thinking about the subject. It does seem like U.S. automakers get reprieves. But they’re never saved, per se.

The word “saved” implies something permanent. That’s not the case with the U.S. auto industry.

Chrysler, now part of Fiat Chrysler Automobiles, has been bailed out by the U.S. twice. Once in the early 1980s, and again almost a decade ago.

Lee Iacocca made his reputation as the man who saved Chrysler with the first bailout. He became the public face of the company, appearing on its commercials.

For much of the 1980s, he milked the image as Chrysler’s savior. For a time, he had a syndicated newspaper column where he opined on many subjects. However, by the time he finally left Chrysler, he was seen as an executive who stayed on too long.

Chrysler twice got married to European automakers after Iacocca’s departure. The first time, in 1998, it hooked up with Daimler-Benz (now Daimler AG). Chrysler plant workers, upon hearing the announcement, wondered if their employee discount plans could be applied to buying Mercedes-Benz models.

That marriage soured in the 2000s. Daimler dumped Chrysler. The Cerberus Capital Management private equity firm — named after a dog who guarded the gates to hell — took over. That deal happened just in time for the largest economic downturn since the Depression. Chrysler ended up being picked up by Italy’s Fiat as part of the second U.S.  bailout.

Sergio Marchionne, the executive who put together the Fiat-Chrysler deal, kept trying to merge Fiat Chrysler into another automaker before his death earlier this year. He never succeeded. It remains to be seen what with happen with Fiat Chrysler.

Ford Reaches Out

Ford Motor Co. was supposedly saved in the mid-1980s when the company introduced the then-innovatively styled Taurus. For years, Ford got a lot of positive press from the Taurus.. But things change. There were scares in the early 1990s and early 2000s. In 2006, Ford brought in a Boeing Co. executive, Alan Mulally, to run the company.

For years, Mulally was seen as Ford’s savior. But after Mulally’s departure, Ford was again in a crisis. This time it was trying to cope with a  future of self-driving and electric vehicles. Four years after Mulally left, Ford’s future is an unsettled as it ever was.

Which leaves us with the largest U.S.-based automaker, General Motors Co. The company had massive layoffs and plant closures in the early 1990s. Then-CEO Jack Smith, who took over from a deposed Robert Stempel, supposedly put GM on the right track. Yet, less than 20 tears later (and after Smith retired), GM was seeking a U.S. bailout.

A Fired CEO

GM got it. But Rick Wagoner, Jack Smith’s successor, Rick Wagoner, was fired by the Obama administration as part of the deal.

The current GM CEO, Mary Barra, has made moves her predecessors never did. She sold off GM’s European operations, which posted deficits since the late 1990s.

Now, GM has said it plans to close (or “unallocate” models for) five North American plants. It also intends to cut 15% of its salaried jobs.

No, U.S. automakers haven’t been saved. They’re still trying to figure out what to do with their past reprieves. The future remains unsettled for GM, Ford and Fiat Chrysler.

The auto industry is (relatively) easy to reprieve. It’s not easy to save.

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