Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – Certain members of Congress may want American cars and their components built in the U.S., but the President’s Task Force on the Auto Industry is not likely to recommend legislation mandating it.

“We did not tell the companies you ought to make cars in America or not make cars in America,” Ron Bloom, a task force member and senior advisor to the Secretary of the Treasury, says in a media briefing before his speech this week at the Management Briefing Seminars here.

President Obama convened the 11-member task force Feb. 20 to review the restructuring plans of the former General Motors Corp. and Chrysler LLC and to recommend a course of action. The process culminated in rapid bankruptcy proceedings this summer for the two auto makers.

As part of GM’s restructuring – closely supervised by the task force – Bloom says the auto maker’s new cost structure allows it to make money on vehicles assembled in the U.S.

“Obviously, it’s a positive when you see General Motors making cars in America when they can do it and make money,” he says. “GM’s business plan for the first time in 30 years calls for the company’s share of cars sold in America, made in America, to go up.”

Although boosting domestic content is a noble goal, Bloom raises concerns about fairness.

“If you insist on making GM an instrument of government policy in one particular area, then I think you prevent it from being successful in the marketplace,” he says. “If the government wants a rule about American content, it ought to have a rule. But that should be the rule for everyone.”

With regard to GM’s European unit, Adam Opel GmbH, Bloom says the task force is merely supporting GM as dialogue continues in Germany about Opel’s fate.

“We are not directly involved in the negotiations,” he says, adding the task force is intent on allowing GM’s board and management to run the company. “This is a good example of this being GM’s decision.”

Likewise, Bloom says critics who assume government ownership of auto makers will somehow alter the shape of industry regulations, such as corporate average fuel economy, are just plain wrong.

“We are not responsible for CAFE standards or climate-change legislation,” says Bloom, who earlier in his career was a founding partner of the investment banking firm, Keilin and Bloom. “We’re a bunch of deal guys who tried to get a company restructured.”

CAFE standards also came up during the audience Q&A after Bloom’s speech. A conference attendee asked if Bloom believes small “green cars” that comply with the government’s new 35.5 mpg (6.6 L/100 km) fuel-economy mandate will meet customer needs.

“We spent a long time with GM and Chrysler making sure their business plans assumed there would be CAFE standards, and therefore the fleet they provide people will need to be fully compliant with those standards,” he says.

“That’s the law. People are expected to obey it – GM and Chrysler, the same as Ford (Motor Co.) and Toyota (Motor Corp.) and anyone else. We’re quite confident the companies can make cars that get high mileage and offer Americans the features they want.”

Prior to joining the Treasury Dept., Bloom served as a special assistant to the president of the United Steelworkers union. Because of his previous union affiliation, Bloom has faced criticism that he heavily favored the United Auto Workers in the restructuring.

“I’ve heard the concern, and I’m trying to find the basis of it,” he says. “I think there was a very tough arm’s-length bargain made with the UAW.”

He says the union made enormous concessions on pay and benefits for active employees and asked more than 600,000 retirees at GM and Chrysler to dramatically reduce the health care they were promised.

“They facilitated working with the companies on the closing of dozens of factories and the loss of tens of thousands of jobs,” Bloom says of the union. “I don’t see that there was some sweet deal made for the UAW.”

He also dismisses criticism that the government should not have rescued the auto makers.

“I would challenge any of the critics to propose a real alternative as opposed to simply potshot criticism,” Bloom says. “I think we did what needed to be done, and I think the other options were truly horrific.”