GM Lobbies Current GM Auto Owners to Contact Congress on Their Behalf

My wife got the email below a few hours ago from General Motors’ Troy A. Clarke, Group Vice President and President GM North America at GM.

I assume that we got this letter because we own a GM car. The email reeks of desperation to me. GM says in their letter that they don’t want a bailout from Congress that they only want a $25 billion loan.

Whether or not GM ends up in Chapter 11 or not, it seems to me to be in poor taste for GM to try to use my personal information that they possess for the purposes of political lobbying.

What do you think? Should the U.S. bailout, er, I mean “loan” the automakers another $25 bil? If so, who else deserves a bailout as well? The homebuilders have asked for one. Nobody’s building homes anymore. What about the newspaper business? They’re in deep trouble right now because people aren’t subscribing or buying newspapers like they used to. Should the U.S. Govt bail out the newspapers as well?

Anyways, it’s a complicated situation. Email received today below:

Dear Thomas Hawk,

You made the right choice when you put your confidence in General Motors, and we appreciate your past support. I want to assure you that we are making our best vehicles ever, and we have exciting plans for the future. But we need your help now. Simply put, we need you to join us to let Congress know that a bridge loan to help U.S. automakers also helps strengthen the U.S. economy and preserve millions of American jobs.

Despite what you may be hearing, we are not asking Congress for a bailout but rather a loan that will be repaid.

The U.S. economy is at a crossroads due to the worldwide credit crisis, and all Americans are feeling the effects of the worst economic downturn in 75 years. Despite our successful efforts to restructure, reduce costs and enhance liquidity, U.S. auto sales rely on access to credit, which is all but frozen through traditional channels.

The consequences of the domestic auto industry collapsing would far exceed the $25 billion loan needed to bridge the current crisis. According to a recent study by the Center for Automotive Research:

• One in 10 American jobs depends on U.S. automakers
• Nearly 3 million jobs are at immediate risk
• U.S. personal income could be reduced by $150 billion
• The tax revenue lost over 3 years would be more than $156 billion

Discussions are now underway in Washington, D.C., concerning loans to support U.S. carmakers. I am asking for your support in this vital effort by contacting your state representatives.

Please take a few minutes to go to www.gmfactsandfiction.com, where we have made it easy for you to contact your U.S. senators and representatives. Just click on the “I’m a Concerned American” link under the “Mobilize Now” section, and enter your name and ZIP code to send a personalized e-mail stating your support for the U.S. automotive industry.

Let me assure you that General Motors has made dramatic improvements over the last 10 years. In fact, we are leading the industry with award-winning vehicles like the Chevrolet Malibu, Cadillac CTS, Buick Enclave, Pontiac G8, GMC Acadia, Chevy Tahoe Hybrid, Saturn AURA and more. We offer 18 models with an EPA estimated 30 MPG highway or better — more than Toyota or Honda. GM has 6 hybrids in market and 3 more by mid-2009. GM has closed the quality gap with the imports, and today we are putting our best quality vehicles on the road.

Please share this information with friends and family using the link on the site.

Thank you for helping keep our economy viable.

Sincerely,

Troy Clarke

Be Sociable, Share!
Loading Facebook Comments ...

18 Comments

  1. Shawn says:

    I agree with you. Using your customer information to send you a letter encouraging you to lobby Congress on their behalf is in very poor taste. It would be one thing if the letter was just explaining their financial situation, particularly if you are in the process of repaying on your GM-financed loan. But to encourage you to contact Congress through their own propaganda website is a bit too far.

  2. Chip Griffin says:

    Contacting your customers to garner support for legislation that affects your company seems like a very reasonable tactic to me. If your own customers (and employees and partners) don’t care, you don’t have much chance of success.

    (Note that I’m not addressing the specific merits of the loan proposal, just the communications tactic.)

  3. Jason says:

    It is desperation. I called my representatives and urged them to not support the bailout.

  4. That was a creepy letter. I’m glad I don’t receive that kind of stuff.

  5. Anonymous says:

    Some analysts think Chapter 11 reorganization may not be possible for auto makers, because banks aren’t even lending money to companies with good credit right now. So we may be faced with a giving a government loan for them to accomplish a reorganization, or a chapter 7 liquidation.

    The numbers say 2-3 million jobs are related to the American automobile industry. Let’s assume the number is 2 million. That’s a $12,500 per job loan.

    Forget the human costs for a moment. What’s it going to cost for all these people to be unemployed? Unemployment, welfare, health care and job retraining all have significant costs. Add in the cost of many of them losing their houses, having their cars repossessed, defaulting on their debts and not paying sales, income and property taxes. There are costs associated with these workers losing their pensions and retirement incomes. Remember that these costs are going to happen over a long period of time. It’s not like there are 2 million new jobs waiting for unemployed auto workers to take. The Japanese and European automakers will offer some jobs, but then automobile profits leave the country.

    Is it worth $12,500 per job? I’m far from an economist, but especially in this economy, I say YES.

  6. I too don’t support any kind of bailout. However, I am open to a discussion on loaning said industry some cash, to help out.

    At least then the American people will get a little profit out of it.

    Oh, and if they’re going to be handing out some cash…

    Why not forgive my student loans!?!?

  7. Anonymous says:

    My feeling is that it’s too late. This does seem like a desperate tactic to me. Where has GM and the other U.S car companies been all these years? I do think Ford has made some good progress recently, but U.S. car companies in general have not made the cars that compete. I recently bought a Honda and it is a well-designed, well made and safe vehicle for which I paid no premium. With many U.S. cars the same safety features in my Honda come at a premium cost or are add-ons. That’s too bad.

  8. barrettmanor says:

    I’m of two minds on this. I grew up not a mile from a large GM plant – one that until a couple of weeks ago was cranking out Escalade hybrids on overtime. They’re still working fulltime there. (In fact, I drove by today, and they were holding a big rally in support of the bailout.) I know what happens when the economy goes south and GM lays off people. On that level, I understand what it means to the rank-and-file workers.

    On the other hand, if Congress were to lend money to the automakers, it would have to come with some heavy stipulations. They would need to retool to make cars that compete (or beat) European and Asian cars in terms of MPG and low emissions. Executives would have to forego excessive bonuses.

    My other stipulation is that pensions and other benefits for retirees don’t get raped to help pay for this. A lot of people stuck with GM and the other automakers (hell, this happened in other, non-union industries) through some tough times on promises of a good retirement. They took pay cuts, hour cuts, whatever it took to keep their jobs. Don’t leave them high and dry.

  9. Chessa! says:

    I cannot believe that they sent that letter to you. I agree with shawn.

  10. Jake says:

    I thin the original bailout was essentially insane. See here for for short & long summary. That said, I think it's nuts that we are giving hundreds of billions of loans (with a real worth in the tens of billions in value) & $140 billion in underhanded tax cuts to the financial idiots at the center of the storm while letting carmakers go bust.

    If they are going to spend the full $350 or $700 billion, I'd like to see the Big 3 first in line, not last.

    Put it another way: the whole bailout was supposed to unclog credit at the top and let it trickle down to regular folks so they can buy new cars and get the economy moving. Instead, we've injected hundreds of billions of dollars of capital into first-tier banks, and these banks have rightly kept a tight leash on credit.

    So we ARE bailing out Wall St., ensuring Goldman et. al. can still hand out billions of dollars in bonuses to millionaires. Yet George Bush and the Congressional Republicans cheerlead while GM goes bust and they wag their fingers at the execs for overpaying assembly line employees who might make 1/10 as much as the liars on Wall St.

    It makes me mad. I'm pissed at Congress for passing that bailout, because they handed Bush a $700 billion blank check and got absolutely nothing in return… zip, zilch, zip nada. And folks like Senator Feinstein had the gall to applaud their own performance while mocking their constituents as ignorant.

    I got news for Feinstein and others— you fucked up, and you do not have the moral authority to even question Paulson. I'll never vote again for any of my three congresswomen who gave Bush this going-away gift to line his friends' pockets, while ignoring their own supporters. It's appalling. I'm ashamed of my fellow citizens for sending so many of these crooks back to Congress.

  11. mattbg says:

    Chapter 11 doesn’t mean the company evaporates; it means they get a reprieve while they restructure, and come out of it in a position to put loans to good use.

    Without the stick of Chapter 11, they can’t reach constructive deals with their suppliers, unions, executives, etc. Nobody will budge until they’re forced to with the threat of losing their business or jobs.

    So, I’d vote to let them go to Chapter 11.

  12. Yeah it’s desperate and yeah, it’s an offensive use of customer info.

    Yet the simple math is it’ll be far, far cheaper to save GM than to let them crater. TImes are too ugly, too prone to chain-reaction for “deserving” to figure into it. Some “creative destruction” has to happen–and will–but there’s a point where panic dispersal of assets ceases to be creative.

    Times like these show the vast superiority of a republic over a democracy–given the intense public hostility to Wall Street and failing corporations, can you imagine the vengeful idiocy the people would enact given half a chance?

    Besides, the TARP program and the AIG bailout have shown the government can drive a hard bargain when there’s nowhere else to go.

    But maybe the government should wait–it’s starting to look like the government providing debtor-in-possession financing to a chapter 11 GM could give a lot more bang for the buck than keeping it out of bankruptcy. GM can never be an efficient global competitor while it’s still saddled with insanely generous pension obligations. Chapter 11 them away and it suddenly becomes a lot cheaper to save, even if the government does have to pay for some of the pensions.

  13. awp0 says:

    “Is it worth $12,500 per job?”

    Sure it is. Too bad that’s not the question. Barney Frank, who wrote the bill, was interviewed by NPR this morning and clarified that this is merely the amount required to keep them surviving for a month or two until they can come up with some kind of plan which he expects to involve borrowing significantly more money from the government.

    I’d support this bailout if $25b were the amount required to get them back on their feet, but it’s not. This is first of many more packages that they’ll need and by the end of it I wouldn’t be surprised to see a $50k/employee figure or more. Then your question becomes a lot more interesting.

    I find it shocking that these guys can come begging for money without any kind of plan. What exactly is their strategy?

    By the way I’m a democrat, but I’m fairly disappointed by my party’s rush to give money and support to poorly managed obsolete companies and the corresponding fat cat union leaders. It’s times like this that lead to innovation. Maybe the Detroit auto makers need to step aside and let some leaner and more progressive upstarts fight for the market.

  14. Cassandra says:

    Are you kidding? Bailout the UAW, I mean auto industry? No way! People aren’t buying cars, just ask Toyota.

    There’s a perfect financial storm brewing the likes of which we haven’t seen since the 1930’s – people are reducing their spending to make up for the losses in their net worth. Have you looked at the value of your 401K lately? Not to mention the continued decline in the value of real estate.

    Lots of folks that I know have put off their retirements indefinitely. They simply can’t afford to retire (and they’re old enough).

    And the cost of sending your kids to college? Are you going to forgo their education for a flashy ride? I think not.

    Will the auto industry survive? Who knows? They could end up casualties of a 21st century depression and remembered a relics of the 20th century.

  15. “Dear Thomas Hawk,”

    You bought a car with your pen name?

    /jk

  16. Anonymous says:

    I agree with Devlin that energy efficiency is the way to go. There is something to be said about SUVs and their increased security, but why hasn’t the auto industry invested more into research for PHEVs (www.phev.com)?

    Could it be because of big oil company kickbacks? you just never know what goes on behind those closed doors.

    Actually, the auto industry should have seen this coming, when gas prices first started getting expensive. They should have immediately pulled about 90% production on high gas consuming vehicles and transfered that into PHEV development. Ionized batteries can increase mpg to 100-200.

  17. Simon says:

    I thought yesterdays performance of the CEO was just amazing. They all arrived in private jets and they all refused to consider a salary cut.

    It would have been so easy for them to fly commercial and to accept that for the good of the company they’d be scaling back their salaries for a while. It’s not like they’ll starve. Most of these guys have been earning $20 mill plus for years they’re not exactly going o have a tough time.

    I think the tragedy is these clowns are running these companies for their own ego’s and not for the good of the staff, shareholders and other stakeholders.

    If the government decided to support them a huge salary cut should be factored into the equation.

  18. Engine Guy says:

    This is a very interesting article to me. Well, actually all of your articles seem to be very cutting edge. But the automotive industry directly affects my business as well. My wife and I started an auto parts business about a year and a half ago. We are in our late twenties and didn’t have a lot saved up at the time, so when the economy started to take a turn we were pretty worried.

    It is very unfortunate what is happening to the automotive industry and the major loss of jobs. Our business didn’t really see a hit like the automotive manufacturers, probably because we sell engine and transmission replacements. I’ve heard used car sales have risen 30% which would make sense why we haven’t taken the slap.

    I hope new car sales pick up again. New car sales make up a very large percentage of America’s job opportunities.

    Again, great site!

    Best,

    Brian Hanson