Today’s Qs for O’s WH – 6/1/2009

Jun 1, 2009 4:12pm

TAPPER:  To probe a little further on the White House and the administration, how much you’re going to be involved in the day-to-day operations of the company, if General Motors wants to manufacture a car that your Auto Task Force, whether it’s (Steve) Rattner or (Brian) Deese or whoever, thinks is not going to be a car that’s going to sell very well, are you going to stop General Motors from manufacturing that car?
GIBBS:  Well, Jake, we don’t make those determinations.  Those aren’t — we’re — Brian Deese isn’t picking out Chevy Malibu’s colors for next year.

TAPPER:  I’m not talking about the colors for next year.  You said that the point is, the exit strategy is make the company viable…
GIBBS:  Right.
TAPPER:  …so that G.M. is making cars that people want to buy. So are you going to be involved in…
GIBBS:  No, we will be involved in corporate governance decisions such as setting up a board of directors that is going to make those business decisions based on how to get the company to profitability. That’s what each company — that’s what the board of directors and the CEOs and the managers and the workers of every company want to be involved in is a viable, strong, profitable company.
Look, now — and I don’t want to confuse this, so — obviously Congress and the executive branch are involved in — have always been involved in some decisions.  Again, I’m not — I don’t want to commingle these issues, but I am separating to some degree.  Two years ago, Congress set fuel mileage standards that go through model 2016. OK?   Those have been established.  I’ve seen reports that said, “Well, you know, we may — you know, the Auto Task Force may decide that, you know, it’s time to build, you know, these tiny little cars that go 40 miles an hour, blah, blah, blah.”
Congress has always exercised its purview to set, for instance, corporate average fuel economy standards.

That’s — I know — not what you’re talking about.  But I am sort of separating some of those issues so that we’re not in the midst of confusing them.
TAPPER:  Right.  No, I guess my point is:  Fritz Henderson said, today, that the standard is going to be that they’re going to try to build for their new lines of cars and trucks, ones that are outstanding that people want to buy, which came as a surprise to me, that this was some new idea for an auto manufacturer — the idea that they want to try to come up with something that consumers would actually like to purchase.
What reason do we have for confidence that United Automakers, the people running these companies, are going to be able to come up with something that Americans are going to want to buy, and therefore, this 30 to $50 billion investment is going to pay off?
GIBBS:  Well, look, I think you have seen over the course of several years an auto industry that has seen, regardless of economic conditions, a fairly dramatic decrease in its auto sales, not the least of which is because some of — you know, you’ve seen the reports.  Your…
TAPPER:  …and throughout that they kept on making Hummers, and they kept on making junky cars that nobody wanted to buy.
GIBBS:  Well, I think part of — part of the restructuring, ultimately, is that the auto task force forced some decisions that I think, in many ways, some of these companies have been putting off for years.  You know, the auto companies have dropped brands.  We’ve all seen that — you know, whereas some people, you know, different companies are marketing only a few different models and using a fixed number of advertising dollars to push them, whereas some of the American auto companies have had 10 or 12 different models.  You know, you’ve seen different companies that have the same car – literally the same car under different names in several different manufacturers, which hasn’t made a lot of sense.
Obviously, I think, again, one of the things that’s been done is, there has — there’s a fundamental restructuring…
TAPPER:  You’re proving my point.  It’s not like Fritz Henderson just walked in from a — from another company.  I mean, what makes you think that — that this investment is going to pay off, just because they’ve learned a lesson now?
GIBBS:  Well, I think that — I think in many ways, their previous business model had been very locked in.  I don’t — I think you’ve all seen the reports today of the serious amount of debt that G.M. was carrying. Right?

GIBBS:  When you’re losing that kind of money, it’s hard to undergo some fundamental restructuring without making some very fundamental decisions.  I think it’s pretty clear that the companies have in many instances decided that they’ve got to produce different cars.  Some of those are coming on in later model years.
There are things like the Chevy Volt that I think people believe, based on the high price of gas, based on consciousness about our dependence on foreign oil, can create different markets.
But I think that fundamentally, what has happened is a company is free now to make fundamentally different decisions.

– jpt

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