DETROIT – One down and one to go. The House of Representatives passed the legislation to provide a $15 billion bridge loan to GM and Chrysler before the end of the year. But now it has to be approved in the Senate where its future is very uncertain. A cadre of conservative Republicans, led by Senator Richard Shelby of Alabama, are vociferously opposing the bill. And they oppose their president. Even the White House is now in favor of providing this loan to the automakers.
So why are Shelby and his cohorts so against this bill? They say that unless the Big Three make even more massive cuts, this is just a waste of money. I’d agree with them to a point, but there’s more going on here. I believe they’re out to break the union’s back. They know the Employee Free Choice Act will likely be enacted next year under an Obama Administration, which it will make it far easier for the UAW to unionize the transplants. Senator Shelby has three of those transplants in his state of Alabama. And he may want to see the UAW so weakened it can’t organize those plants, or if it does, will not be able to drive up wages or benefits.
CSM Worldwide predicts that the Big Three may soon be the Big Two. The consulting firm predicts Chrysler will not survive even if it gets government loans. It blames it on a lack of scale and new product development and Cerberus’ unwillingness to invest money in the company. Also, Chrysler’s merger with Daimler essentially gutted its R&D operations.
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