As noisome as the presidential campaign has already become, you can expect to hear even more in the weeks before November’s election. But don’t expect to see any General Motors plants serve as backdrop for campaign stump speeches.
The automaker, hoping to downplay its role in the high-stakes battle, has barred the two presidential candidates until after the election.
That move is probably no surprise. President Barack Obama is taking credit for saving both GM and Chrysler with $85 billion in federal aid. His challenger, Republican Mitt Romney, has long opposed the bailout – though he has also tried to take credit for the two makers’ turnaround.
Critics of the costly rescue effort have, meanwhile, dubbed GM “Government Motors,” a derisive nickname that some industry analysts believe has cost the company significant sales.
The political fall-out has only gotten worse for GM in recent weeks as its stock price has continued tumbling from the $33 a share set during its November 2010 IPO. A recent report by the White House warned that at the current GM stock price, the Treasury would lose about $25 billion if it cashed out its shares. (For more on that story, Click Here.)
For its part, GM would like to simply put the debate behind. “We would like to put all of our energy behind selling our cars and trucks,” said Bob Ferguson, GM’s vice president for global public policy. “It’s an understatement to say we can’t wait for November to get here.”
But the bailout isn’t likely to vanish from the headlines. It’s all but certain to become a topic during this week’s GOP convention in Tampa, where speakers will hammer on the potential taxpayer losses. Republicans will also accuse the Administration of pandering to union interests. The United Auto Workers Union received a major stake in both GM and Chrysler as part of the bailouts.
The presumptive GOP candidate authored a November 2008 New York Times op-ed piece titled “Let Detroit Go Bankrupt.” Earlier this year, however, Romney insisted he deserves credit for the turnaround of both GM and Chrysler having laid out a plan for a managed bankruptcy of the two automakers.
Ironically, the bailouts were initiated in late 2008 by former Pres. George W. Bush after the collapse of Lehman Bros. sent the economy into a rapid, downward spiral. But his successor significantly expanded the financial support and helped manage GM and Chrysler’s subsequent bankrupticies.
Pres. Obama, meanwhile, is likely to focus on the positive side – notably the million jobs he has claimed were saved – during the upcoming Democratic convention.
GM has reason to be particularly sensitive to the ongoing debate. The Treasury still owns about a third of its stock. Chrysler, on the other hand, has paid off the government loans.
Candidate Romney has promised to sell off the remaining government holdings in GM were he elected president – though investment analysts have questioned the wisdom of signaling such a move as it could drive down the maker’s share price and further increase the Treasury’s likely loss.
Since 2009’s GM and Chrysler bankruptcies public opinion has shifted slightly – from strong opposition to the bailouts to modest support. But the continued debate remains a problem for an automaker that would simply like to get back to business as usual.
“In America, it’s pretty polarized — 50% think it’s a good idea, 50% think it’s a bad idea,” Joel Ewanick, GM’s former global marketing chief, said while attending a June conference in France. “Well that’s really not a good thing when you’re trying to sell cars to have 50% of your people saying, ‘I’m not going to do it; I’d rather buy a Ford because of it.’ ”
Chrysler has largely sidestepped the debate – and has taken no formal action to bar candidate visits. Some observers find that ironic because the 2008-2009 bailout actually helped place the smallest of the American automakers under the control of a foreign manufacturer – Italian-based Fiat SpA.
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