WSJ: Why Washington Stays In Neutral as GM, Ford Stall

[question everything]

Why Washington Stays In Neutral as GM, Ford Stall

Shifts in Political Landscape Curb Appetite for a Bailout; Toyota's Mixed Messages

By JOHN HARWOOD in Washington, JATHON SAPSFORD in Tokyo and NORIHIKO SHIROUZU in Detroit
Staff Reporters of THE WALL STREET JOURNAL
April 27, 2005; Page A1

Both General Motors Corp. and Ford Motor Co. are experiencing serious financial hardship. But, in a sign of a changed political climate, nobody in Washington is talking about bailing them out.

Indeed, the loudest voice speaking out for helping the nation's top two auto makers recently has come from, of all places, Japan. On Monday, Toyota Motor Corp. Chairman Hiroshi Okuda told reporters that Japan's auto industry needs to give Detroit "time and room to catch a breath." He even suggested Toyota might raise prices on cars sold in the U.S. to ease pressures on GM and Ford... when President Bush was asked on CNBC about GM's troubles last week, he said: "I think they're going to have to learn how to compete."

The changed attitude reflects the markedly reshaped political situation in the auto industry. For two decades, Japanese and European auto makers have sprinkled job-producing auto-assembly plants across the U.S. Those have created a political constituency for foreign auto companies that didn't exist before. Many of those plants are situated in southern states such as Tennessee, Alabama, South Carolina and Texas, which make up the heart of the red-state region in which today's dominant Republican party is strongest. As a result, politicians have less desire to penalize foreign auto makers as a way of shielding traditional American auto manufacturers than they did in the past.

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"I don't think the government's going to step in and become a partner with every enterprise," says John Engler, who heads the National Association of Manufacturers and is a former Republican governor of Michigan. "We cannot, with the deficits we face today, step in and put loan guarantees behind any company."

To be sure, GM and Ford aren't requesting specific financial bailouts from Washington. But GM has signaled for some months that it would welcome some sort of government help with the enormous cost burden it faces in providing health care for its 1.1 million retirees, employees and dependents, estimated at $5.6 billion this year. The company has supported proposals to have the government shoulder so-called catastrophic health-care expenses. GM executives also have complained persistently that the yen is still too weak compared with the dollar, which they argue gives Japanese auto makers an unwarranted advantage.

(snip)



Write to John Harwood at [e-mail], Jathon Sapsford at [e-mail] and Norihiko Shirouzu at [e-mail]

URL for this article:
http://online.wsj.com/article/0,,SB111455808016217668,00.html (subscription)

[nothingshocksmeanymore]

1. I suspect no bail out is in place in order to let them default on pensions

[AP]

2. They probably just want to hurt Granholm's chances for reelection.

If MI had a Republican governmor, Washington might try to help GM and Ford.