November 18, 2008 -, IR Summary/NYT – Automakers are in a soup, there is a lot of criticism against them, people don’t want any bailout for them, no aid for companies, whereas the industry needs heavy bailout to come out of the present crisis. The Bush Administration has refused to oblige them with $700 billion banking bailout. However, President-elect Barack Obama wants that the industry should get assistance, how much has become a question mark?

When the leaders of the three Detroit auto companies and the United Automobile Workers union travel to Washington to make their case for a federal bailout, they will be flying into stiff headwinds of public opinion.

Thus far, much of the commentary in Washington, in the pages of major newspapers and on the Web, has been against providing financial support for the companies, which they will say they desperately need in hearings beginning on Tuesday.
The waves of criticism have been so strong that Susan Tompor, a columnist for The Detroit Free Press, was moved to write on Sunday’s front page: “I never knew Detroit was a dirty word.”

It is a remarkable shift for an industry that has long wielded considerable clout in Washington.

But that support has dwindled for many reasons, leaving backers of a bailout, including the House speaker, Nancy Pelosi, and Senate majority leader, Harry Reid, having a tough time making their case that Detroit should be saved.
So how did the famous 1953 quotation from the former General Motors president Charles E. Wilson — that what was good for our country was good for G.M., and vice versa — become a dated notion to so many people?

Analysts and longtime observers of the industry say several strategic missteps have hurt Detroit’s standing.

The carmakers, for example, fought hard in recent years against two Congressional efforts to raise fuel economy standards, at a time when Americans were struggling with more expensive gasoline and had become more environmentally conscious.
They won the 2005 fight, when 67 senators, including Hillary Rodham Clinton and John Kerry, sided with Detroit’s argument that it did not have the technology to meet a modest increase.

But Detroit lost last year’s effort to block an increase to 40 miles per gallon by 2020. Some senators criticized the industry’s failure to sell cars like the Toyota Prius, which was built only as a hybrid — a vehicle that G.M.’s vice chairman, Robert A. Lutz, dismissed early on as a public relations move.

Some Congressional support has also dwindled because the automakers closed plants in other states, like Alabama, Georgia, Louisiana and Delaware, and consolidated their operations closer to home.

Meanwhile, foreign auto companies have built plants across the South, picking up lawmakers like Senator Richard Shelby, Republican of Alabama, who now are more allied with the foreign car companies.

Michael Useem, professor of management at the Wharton School at the University of Pennsylvania, said the lack of leadership from within the Detroit companies had hurt their effort as well. He pointed to Lee A. Iacocca, former chief of Chrysler, whose public profile soared after his company was given federal loan guarantees in 1980, turning him into a 1980s equivalent of the popular businessman Warren E. Buffett. More