Bailing Out the Auto Industry

The most incongruous decision I ever made was to channel my youthful ambition toward a career in the auto industry. At 17, I began working in a GM brake plant as a co-op student enrolled at General Motors Institute (now Kettering University), a school that in all seriousness called itself “the West Point of the automotive industry.” I graduated from GMI five years later with a degree in engineering and then spent another three years with GM before moving on to other things that I would regret in other ways.

Although my tenure in the industry ended long ago, it gave me the benefit of an inside view that colors my perception of the drama that unfolded this week on Capitol Hill. There was little to admire at General Motors, other than its vaunted ability to make money in spite of itself. It was gargantuan, lumbering, and bureaucratic. Its plants were depressing, contentious places - cauldrons of social pathologies. Labyrinthine org charts offered white-collar workers plenty of places to run or hide, depending on their ambition. Union rules made a parody of blue-collar work: Replacement of a switch on a machine required a portfolio of skilled tradesmen; “make-out and quit” standards gave some people the right to stop work three hours into their shift; guys busted for theft or vandalism or worse were protected from disciplinary action. Employees of all types slept on company time, returned from lunch drunk, and milked their straight-time responsibilities to insure plenty of overtime. It was a culture of entitlement that the rest of the country was vigorously admonished to protect by “buying American.”

The insularity of GM’s senior management was astonishing. Executives at my own division, one of dozens in the company backwaters that made parts for the far more prestigious car divisions, were tucked away in a secure corner and usually only seen as herds of expensive suits migrating to and from the executive dining room. Despite the status they enjoyed among the provincials, they didn’t attract much notice by the nobles at court in Detroit. Our general manager didn’t even rate one of the countless vice-presidencies that represented the pinnacle of corporate success (the President and Chairman being living deities whose jobs were beyond imagining). When a bona fide vice-president would pay a visit, as happened every year or two, it would be preceded by a flurry of cleaning and painting in every department, just on the odd chance that his Lord might stroll past on a tour and deign to watch a machine and ask a learned question or two.

With my background I probably should not have been surprised at the curious spectacle of three men arriving in Washington on $30 million corporate jets to pick up a welfare check. But surprised I was, if only at the apparent absence of image consultants in their entourages. As to the substance of their pleas, my reflexive reaction was one of schadenfreude: Let ‘em sink in their own stink. These staggering giants don’t deserve a bailout and giving them charity would be like giving a twenty to a street-corner drunk.

In the past couple of days, however, my initial views have given way to the sobering realization that this bailout is not about an industry, it’s about the country. With deflation and depression looming ominously, allowing one or more of the Big Three to collapse would risk a devastating chain reaction. We have no choice but to view the bailout as part of a larger Keynesian stimulus package designed to arrest our economy’s decline and to reorient it in a sustainable direction.

We can only insist that our money not serve simply to prop up dying firms comfortable in their roles as laggards and obstructionists. Oil-based transportation is a long-term loser, so the bailout should be a first step to spur us on to something new.