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There was a time in the decades following World War II that the British auto industry was vibrant, technologically sophisticated, and growing. It was no surprise when, for example, Jaguar won the grueling 24 Hours of LeMans sports car race three years running in the 1950s because the firm was the first automaker to adapt disc brakes successfully from aircraft to automobiles.
But, enervated by complacent management and recalcitrant unions, the British auto industry lost its edge. Partial nationalization came in 1968 followed by the complete government takeover in 1975. Within a decade, what had been a thriving economic powerhouse was reduced to a shambles. Once-proud British marques like Jaguar, Aston Martin, and the Mini were sold to foreigners, while scattered, isolated remnants survived a few years longer as cottage industries.
Skip forward to this week as General Motors embarks on an assuredly similar path of nationalization and inevitable demise. Under the terms of agreements now taking final form, what was only a few years ago America’s biggest company will soon cease to exist, and GM will become “Government Motors.” This is happening because of two presidents: Barack Obama, who controls GM’s decisionmakers via Washington’s Toxic Assets Recovery Program (TARP), and Ron Gettelfinger of the United Auto Workers.
Obama said nothing as Gettelfinger refused to make pay and benefits concessions that GM had to have to continue as a private entity.
The GM news release Monday made the new order clear:
"As a result of its ownership of GM common stock, the U.S. Treasury will be able to elect all of our directors and to control the vote on substantially all matters brought for a stockholder vote."
In case anybody missed the point, the statement then added:
“In addition, through its stockholder voting rights and election of directors, and its role as a significant lender to us, the U.S. Treasury will be able to exercise significant influence and control over our business if it elects to do so."
Washington now dictates who manages GM and what the automaker will try to sell, as well as the working conditions of all its employees. It’s much the same at Chrysler, except for one wrinkle involving Italy’s Fiat, which gets a minority position in the new firm.
The majority position at Chrysler will be explicitly owned by the UAW, whereas the U.S. Treasury will effectively be a UAW proxy at GM.
Not long ago, GM was so big that Washington regularly threatened anti-trust action. Well, at least Obama and Gettelfinger have taken care of that problem.
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