Counsel To President's Men.

unit731 · October 8, 2010

Jesse Snyder

Automotive News -- September 27, 2010 - 12:01 am ET

Ron Bloom, a senior member of President Barack Obama's auto task force, looked Mike Jackson in the eye and said: "Tell me what I don't know."

Jackson, the AutoNation CEO, had huddled in Washington on that March morning in 2009 with the team of specialists who were deciding the fate of the U.S. auto industry.

What Bloom really wanted to find out from the head of the nation's largest dealership group was whether General Motors and Chrysler were worth saving. And that question turned on whether underlying demand was really as low as the sub-10 million sales rate in the first quarter of 2009.

The task force, which Obama had created in February, was charged with helping the auto industry survive its worst crisis since World War II. Only two weeks remained before its March 31 deadline to decide what, if any, additional government help GM and Chrysler would get.

The nagging doubt was that post-recession demand would not be strong enough for GM and Chrysler to survive. What if the new normal is only 10 million or 11 million vehicles a year?

Asking a Detroit critic

Looking for fresh perspective, the task force reached out to Jackson, a frequent and outspoken critic of the business practices of the Detroit automakers.

Bloom, a former Wall Street executive and labor restructuring expert, pressed Jackson on the state of the industry. Was fundamental consumer demand too anemic to support the teetering U.S. automakers?

No, said Jackson, real demand was not too weak. Rather, it had been depressed by the credit crunch. Jackson offered to prove that to the task force if it would give him a week.

So on March 23, Jackson was back at the U.S. Treasury Department building, along with AutoNation President Mike Maroone and Senior Vice President Marc Cannon. As they walked through the main entrance off Pennsylvania Avenue next to the White House, they carried Jackson's response -- culled from AutoNation's records of phone contacts, credit applications, credit scores, sales contracts and lender conditions.

"There was a school of thought that the new world was 10 to11 million," Jackson recalled. "We made the case in a very compelling way that this was an artificial, temporary contraction due to credit."

Maroone, a second-generation Chevrolet and Ford dealer before AutoNation bought his stores, came along because Bloom wanted a dealership-level perspective. At the meeting, Maroone said, AutoNation documented how credit had dried up across its hundreds of dealerships.

'Smart guys, good questions'

"We did a data rollout for every lender and every deal, and you can see it," he said. "You can just see the approvals drop, the conditions go way up. It was really obvious."

The task force was a total immersion course on the auto business, cramming years of knowledge and experience into five weeks. Inside the small, Spartan, second-floor conference room, terse questions flew.

Cannon was impressed by the intensity. "Smart guys, good questions," he recalled.

But the task force wanted more evidence that the industry had resilience. Jackson and Cannon returned to Treasury on April 7 and made an expanded presentation in the task force's normal work space, a large conference room full of desks and a long table.

A series of e-mails and phone calls from task force staffers, often late into the night, followed that spring along with another Jackson trip to Washington.

Jackson said AutoNation's size, geographic diversity, centralized accounting and deals with virtually every consumer auto lender provided a perspective for the task force that manufacturers couldn't match.

"We have all the statistics on traffic, and we have every phone call, every Internet lead, every walk-in, credit profiles, what the banks were saying," Jackson said. "We were able to demonstrate to them, unequivocally, that this was an artificial lull induced by the withdrawal of credit from the marketplace.

Ultimately, acting on the advice of the task force and its head, Steven Rattner; Treasury Secretary Timothy Geithner; and congressional Democrats, the Obama administration shepherded GM and Chrysler through streamlined bankruptcies in 2009.

Speaking 15 months later, Jackson described Bloom as "incredibly smart, incredibly quick" and said his shared-sacrifice attitude eventually proved to be the best way to handle a messy situation.

'No sacred cows'

Bloom now oversees the government's GM and Chrysler investment.

"Bloom was absolutely determined to restructure the industry around viability, sustainability and profitability -- and was willing to inflict pain on everyone, no sacred cows," Jackson said. "They all had to be slaughtered, including the unions.

"So even though it's painful to me, it's the only way to save the jobs. Considering the time constraints and the pressures that they had to deal with and the fact that every constituency is unhappy, they did a good job."

Jackson even suggested that the administration should have used the auto task force as a model to help the housing industry or create jobs.

"They missed the boat on that," he said. "It pains me as a Republican to say this, that when a government has to intervene because it's so screwed up, this is the way to do it and get a good result."

focijoe · October 8, 2010

I'm staying out of this one. This thread won't last long.

ryan_hermanutz · October 8, 2010

I'm staying out of this one. This thread won't last long.

Why, it was a good article about what thought process's that went into determining if either company was going to get government loans.

txab · October 8, 2010

IBTL

AThomas7782 · October 8, 2010

I'm staying out of this one. This thread won't last long.

Why? This is not a political post. No one is pushing a political agenda. The Goberment owns GM and this is a GM based web site.

True, the article is not political. That doesn't stop people from throwing politics into the discussion...

jro909 · October 8, 2010

this thread needs to go away.....just for shits does anybody ever wonder if chrysler forums have a whole sub forum full of threads where they just comfort each other waiting for the company to fall back into its hole?