Auto Bailout Winners & Losers 

Posted: 10:23 pm Sunday, December 21st, 2008

By Jamie Dupree

Now that we’ve had the weekend to hash through the auto bailout announcement made last Friday by President Bush, it’s time to think about whether there were winners and losers in that aid plan for General Motors and Chrysler.

It might be that the one automaker which didn’t take any emergency aid – Ford Motor – could be a winner, simply because they can make a case to consumers that they aren’t about to go belly up.

While GM and Chrysler are winners for now, it may only be for the short term.  If they are going to get more aid from the Obama Administration and the new Congress, those two companies will have to make some big cuts.

The United Auto Workers may not be a winner in this at all.  It seems logical that jobs and benefits will have to be cut along the way by GM and Chrysler.

Heck, if you are closing every single one of your manufacturing plants in North America for a month, what does that tell you about excess capacity?

The stockholders could be winners and losers.  If the feds get stock warrants for putting billions into these two companies, it could bring profits, like the billions the feds made off the Chrysler bailout in the 1970s.

Or the stock values could be wiped out if the companies ultimately go to bankruptcy.

Bottom line – the winners right now are GM and Chrysler.  Whether they stay winners as they try to stay alive in the New Year, the Obama Administration and Congress will have a say on that.

I am definitely in the minority on this view, but I still think if the companies aren’t willing to make drastic – and I mean DRASTIC cuts and changes – then I don’t think lawmakers will be willing to write check after check after check for billions in aid.

We’ll see what happens in the months ahead.

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