Why Obama Could Be The Best Thing For Detroit Since Henry Ford

By John Voelcker

John Voelcker

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John is Senior Editor for High Gear Media. In addition to news coverage and new car reviews, John creates and oversees all editorial for High Gear's... More

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Barack Obama

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If there's one thing the past year has taught us, it's that everyone has an opinion about the auto industry. Most are fervently held. Many are unprintable.

If you spend a lot of time reading industry news--we do--you might conclude that President Barack Obama is on a single-handed mission to destroy the US, eviscerate a stunningly successful auto industry, and punish every car buyer by making us all drive golf carts.

We beg to differ. We think Obama could be the best thing that's happened to Detroit since, oh, Henry Ford. Or at least since the 2002 hiring of Bob Lutz to smack some sense into GM's product planners.

Public debate is a messy process, and it's good that everyone gets to air their views. Or gripes. But we hope this high-level view might give GreenCarReports.com readers a different perspective from which to consider the issue.

What has Obama done since January 20? Oh, he merely hired a team that forced a long overdue rationalization of the US industry, but saved it from the very real threat of permanent shutdown.

First, the griping

We've seen Obama slammed, his motives questioned, and his policies impugned more than a few times here at High Gear Media. For instance, here, here, here, here, and here.

Many of those views are widely shared by parts of the automotive press. We read that Obama is playing into China's wicked schemes. "Pardon me while I puke," writes the always eloquent Manny Lopez of the The Detroit News, saying that the president is "playing us for fools."

And so on; there's much more vitriol where that came from.

Our favorite, and most extreme, anti-Obama trope: The government is forcing GM and Chrysler to terminate dealers who have donated to Republican politicians. But as Nate Silver bracingly demonstrates,  pretty much ALL car dealers donate to Republicans.

A lot of it, frankly, makes Obama the latest and most convenient target of pointless whining and self-indulgent nostalgia for a US auto industry that hasn't existed for a long, long time.

Glimmers of reality

But some industry observers--including those in the heart of Detroit--are addressing the reality we see from outside the heart of the industry.

Even in Michigan, where the hard-won middle-class life of hundreds of thousands of taxpayers is being destroyed, the verdict on Obama is evenly split.

Asked whether Obama's involvement with the auto industry is a good thing, 42 percent of Michigan residents say it's hurt, but 39 percent say he has helped the carmakers.

And we particularly like Daniel Howes, who said yesterday in the The Detroit News:

Conventional wisdom in Detroit-centric auto circles is that someone else--aggressive foreign competitors, disloyal American consumers, greedy executives, parasitic unions, a lazy news media, to name a few--is to blame for the forced dismantling of Detroit.

Partly, but so much more: Acceptance that good enough cars and trucks were good enough, when the evidence and the market share trends suggested otherwise. The belief that pay and benefits could only go one way--up--because they always had. A culture that spent more time looking at its past in the rearview mirror instead of tooling itself, and its children, for the future.

Monday, all that was declared dead, even if it actually still lives, battered and bruised, in offices, on plant floors and in GM communities.

So what have Obama and his task force done since August, when the wheels started to come off?

1. He brought in smart outsiders

Obama's automotive task force was widely derided for having few "car people" on it. Impressive resumes, yes. Accomplished executives, yes. But not a single respected statesmen like Bob Lutz.

But it didn't take the team long to understand the challenges facing the auto industry. And outside product design, the need for insiders may be vastly overstated anyway.

Case in point: Alan Mulally, CEO of Ford Motor Company, who spent his career at Boeing. He not only understood Ford's looming capital needs to return to profitability, but got the entire company working with the same playbook globally--something no prior Ford CEO had ever been able to do.

The problem is, the need for radical auto-industry restructuring has been known for years, even decades. Every analyst knows that GM had too many factories, too many brands, too many dealers, and too many employees and retirees whose wages and benefits cost too much.

So did Ford, so did Chrysler. GM itself was arguably bankrupt by 2005, given the commitments it had made to care for retirees.

Yes, GM went through half a dozen restructurings in 25 years. But none cut deep enough or fast enough. With the company continuing to lose market share (from 50 percent four decades ago to less than 20 percent today), more pain was unavoidable.

2. He took time to understand the nuances

Another line of complaint against Obama is the "let 'em die" approach. If Ford was smart enough to borrow funds to restructure itself while they were available, many say, shouldn't competitors who were less adept be allowed to fail?