A year after the bailout of two of the three American auto makers, some verdicts are in, while the jury is still out on the ultimate live or die decision.
Like an Egyptian Pharaoh, if General Motors and/or Chrysler had expired last year, they would have taken many of their servants—including rubber automotive component makers—to the grave with them.
Thanks to government intervention, both companies remain alive today, as do most of their suppliers. Alive, but at a great cost, and still on life support.
On the anniversary of the bailout, the Obama administration is seeking validation, and better poll numbers, for actions it claims kept 1.1 million jobs from disappearing. In fact, with jobs a critical issue of the long, slow recovery, the White House is touting the addition of 55,000 employees by the auto makers since the two bankruptcies, with another 11,000 expected for the rest of the year.
Numbers are highly suspect, especially the “woulda, coulda” kind, like possible job losses if GM and Chrysler had folded. Especially in an election year.
But anyone with a stake in the automotive supplier industry knows the disaster the disappearance of two Detroit auto makers would cause. No company survives without customers.
The most important question is, where are these auto makers now headed? Is prosperity around the corner, a real recovery, or are government props the only thing holding up GM and Chrysler?
Some of the verifiable news is good. Both companies have paid back some of their massive government loans, GM $6.7 billion and Chrysler $4 billion. Later this year GM is expected to make an initial public offering, and Chrysler may do the same in 2011. That could help the taxpayers recover some of the $50 billion poured into GM, and $15 billion spent to save Chrysler.
The big unknown, and what automotive rubber component makers must be most concerned about, is if the two auto firms will capture the public's fancy with new products. We'll see how that goes with the 2011 Chevy Volt, the plug-in electric car with a 40-mile range and a $41,000 price tag. It is creating buzz, and that's encouraging.
There's no reason for a big celebration of the “new” GM and Chrysler on their first anniversary. There is reason for quiet optimism.