GM bailout triggers calls for boycott
Barring an unexpected setback, a “new” General Motors will emerge soon from bankruptcy after eliminating most of its debt, hundreds of dealers and a fair share of its work force — saved by up to $50 billion in federal bailout funds.
But while the once-dominant automaker certainly wouldn’t have been able to survive without that federal largesse, the question is whether it can survive its unlikely alliance with Washington — which will hold a 60 percent stake in the company that emerges from the Chapter 11 process.
A sizable share of Americans, recent surveys show, are reluctant to buy from a bankrupt automaker. Complicating matters, the bailout is triggering a harsh reaction from the conservative end of the political spectrum, with some high-profile pundits calling for an outright boycott of what many are calling “Government Motors.”
Powerful radio talk show host Rush Limbaugh also has been associated with the movement but said he has not encouraged any boycott.
“I think it is media childishness when people start urging boycotts,” he said on his show this month, according to a transcript posted on his Web site.
He did say he has heard from listeners who do not intend to buy another GM or Chrysler car.
“The reasons I got from people who just sent me e-mails was they don’t want to support Obama’s socialism,” Limbaugh said. “They don’t want to support the notion of government running the car companies, and they don’t want to patronize companies that have been bailed out.”
How much of an impact the call for a boycott is having is unclear. GM fared a bit better than some had expected in the May sales sweepstakes, although that reflected activity prior to its June 1 bankruptcy filing. Some studies suggest that U.S. car buyers may be ready to accept the idea that the automaker, like its crosstown rival, Chrysler, will come through its financial woes. (June sales figures will be released next week.)
It helps that the Obama administration has created a publicly funded program to ensure that GM and Chrysler warranties are honored, no matter what happens to the companies, said Art Spinella of Oregon’s CNW Marketing.
A study conducted by CNW, just as GM went into Chapter 11, found that 37 percent of potential U.S. car buyers were planning to steer clear of the company’s products, whether for practical or political reasons. But that was an improvement over previous surveys, Spinella said. In July 2008, when CNW first asked potential buyers the question, about 90 percent said they would not consider buying a vehicle from a bankrupt automaker, he said.
Other surveys have not been so kind to GM, however, and it will likely take several more months to see whether the issue of bankruptcy was a short-term concern or a long-term problem. But it’s clear that the company’s conservative opponents won’t be letting up.
For his part GM Chief Executive Officer Frederick “Fritz” Henderson says he is “concerned” about a backlash against GM, whatever the reason, although he tries to downplay the boycott threat.
“I’m going to bet that U.S. customers will make their own choices,” Henderson said in an interview. “Our job is to do the best we can” to encourage buyers to look past both the bankruptcy and the bailout.
The automaker is counting on a speedy path through the courts to allay fears about its future and the wisdom of the bailout — and also to get the bad news off the front page.
But it’s harder to deal with the Internet. Numerous anti-GM sites, such as GMRetardation.com, have popped up across the Web, some hosting petitions calling for the government to get out of the auto industry, others asking buyers to pledge they will not buy from the Detroit maker.
Intriguingly, there has been somewhat less public opposition to the Chrysler bailout. Why? Analysts suggest that may be because there’s less public money involved, or that the Treasury Department didn’t become the controlling force once the smaller maker emerged from bankruptcy, as it will at GM. Instead, Chrysler is now being run by the Italian auto manufacturer Fiat.
Initially, the automaker backed down, then quickly reversed course, saying it would maintain the advertising. There was little, if any, indication that Dobson’s threats actually cost Ford sales.
So, while radio host Hewitt insists his callers overwhelmingly support his call for a boycott, it’s not clear they’re actually in the car market — and steering their dollars over to GM’s competition. But the carmaker is nonetheless pressing its own case with an aggressive marketing campaign that tackles head-on questions about its bankruptcy, federal bailout and future prospects.