Chrysler financial crisis deepens

Two years ago – two years and two weeks ago – I was standing in a public garden in a city of the Western world which, in accordance with the Christian spirit of the season, shall go un-named by me.

I was talking to a genial workman who for several days had been digging a trench more or less parallel with the footpath that bisected two lawns. I couldn't figure out what this was for and the simple way to find out was to ask the workman. He was going to replace a water pipe that led to the sprinkler system for the flowerbeds. It was 10 December and I hinted that, when Christmas came, the trench would offer a hazard to small rollicking children and large tottering drunks. 'Oh, they'd had that in mind,' he said. The job would take 10 days, would certainly be finished and laid over with new sods by Christmas, at the latest.

Christmas came and went and so did the New Year and the trench looked like a permanent addition. It even had a sign up, simple and to the point. It said, 'Trench. Don't walk in!'.

On 4 January, I was back there and so was the workman with a buddy. I hailed him again and mused that it had, evidently, been a bigger job than they'd calculated. 'No, it wasn't that,' he said, 'but you can't expect us to be slavin' away here through the holidays, can you?' Absolutely not. The job was finished by the middle of January, simply because the man and his buddies had vanished on 23 December and came back again on 3 January.

I learned something from this. The Christmas holiday used to be Christmas Day and Boxing Day. A little later on in the century, New Year's Day was added as a bonus. By now, the holidays mean to many people in the West, Christmas Eve until the first weekday after New Year's Day. Two reflections on this situation occur to me and they were made about roughly the same time at the end of the last century.

This is the first. 'Among the purposes of a society should be to try to arrange for a continuous supply of work at all times and seasons.' That was said by Pope Leo XIII. Surprisingly it was a German who rebutted him, 'Continuous labour of one kind destroys the intensity and flow of a man's animal spirit which find recreation and delight in mere change of activity.' This unlikely hedonist was Karl Marx.

In response, then, to this new productivity tradition which guarantees a continuous flow of animal spirits for 10 days at Christmas time, I'm having to do this talk many days ahead of time and if, in the meantime, the Russians invade Mars or the Chinese change their mind about Mao Tse-tung's widow, now on trial, and make her the new head of state, don't blame me!

This topic leads by an unconscious association to the plight of the Chrysler Corporation and, by extension, in the New Year, to the prospect of an appalling slump in the whole motorcar industry. I hasten to say to anyone who may have drawn the wrong moral that the desperate state of Chrysler has very little to do with the automobile workers themselves. It's true that the president of Chrysler has begged the union to put a voluntary freeze on wages which have been going up by no more than the cost of living index. If the freeze goes on while, as we all know, inflation goes roaring on, then the workers will be a good deal worse off than they were a year ago. And there have been, so far as I know, no complaints about their work habits.

Chrysler's plight, like that of the whole automobile industry, goes back at least six or seven years to the time when the OPEC countries made the first big increase in the price of oil. This country, like all Western and Oriental countries dependent more or less on the Persian Gulf, was staggered at first, but people got used to twice the usual cost of petrol and the automobile industry, for the most part, made no radical changes in the design of its cars. The people simply bought more small, foreign cars and fewer American cars and, at first, this was not a drastic change in buying habits.

But Detroit, having flirted for a little time with the idea of switching to small cars, adjusted by reverting to the manufacture of what we call 'gas guzzlers'. Then, last year, the sale of American cars in this country took an unprecedented tumble. Chrysler begged the federal government for help and, after a very tough debate, the Carter administration guaranteed a loan $1.5 billion. Enormous sighs of relief from the company and its workers. The president of Chrysler saw a new dawn breaking on a new and healthy company.

Well, 1980 turned out to the worst year in living memory for the whole industry – the biggest percentage drop in domestic car sales since the Depression, one automobile worker in three was laid off, an unemployment rate more than three times the national average. Chrysler's chairman predicts that the company will have lost this year $1.7 billion, or 200 million more than the whole federal loan which was meant to prime Chrysler's pump for the next year or two. So Chrysler now wants another $400 million and what Jimmy Carter thinks about it no longer matters.

The incoming leaders of the Reagan administration are divided. Some of them – and they are the ones who don't care to be quoted – believe in a very gingerly way that Chrysler ought to get another loan. Others frankly say that Chrysler must go to the wall. This grim judgement is based on a danger there's been little talk of while we've all been arguing over whether a failing company can go on milking the government – that is, the taxpayers – for enormous loans.

The danger is a clear and present one and likely to become a fact some time in January. It's the really ghastly probability, strong possibility anyway, that by then, the company's net worth will have fallen below zero which would mean that the shares would have no value, except to the company's creditors. The new administration would be being asked to back a company with no net worth. From all the present signs, it will be unlikely to do it.

The position of the United Automobile Workers has never been worse. Till now, they've enjoyed high wages, even as industrial wages go but watching the disastrous decline of Chrysler, they have forfeited increases, accepted cutbacks to stay on the job and are suddenly feeling the loneliness of their political position. The auto workers broke off from the national industrial union, the AFL-CIO, 12 years ago in a row over Vietnam. They felt then, what I should think every American felt, that the automobile industry was the giant of American industry, the surest barometer of the economy and perfectly capable of standing on its own.

This year, it has suffered a form of political exile. First, it backed Senator Kennedy for the Democratic nomination and lost, then it backed Carter for the presidency and lost. Year in, year out, the auto union has been consulted by presidents and secretaries of the treasury and the secretaries of labour about policy and, once every four years, about possible cabinet appointments. This year, the union's president says he has not had one call.

So, they're thinking, if things go from bad to worse, of rejoining the AFL-CIO. In the meantime, Mr Fraser, the union president, has sent a telegram on behalf of his membership to Mr Reagan. He wants, as soon as possible, 'an emergency summit meeting' with the new president:

'Unless', he wrote, 'the Reagan administration acts affirmatively to establish an automobile policy for this country, the devastation affecting hundreds of auto-based communities will spread to thousands of other towns and cities as this crisis ripples through the economy. We are not facing a cyclical downturn from which there will be an inevitable and automatic recovery. We are facing the literal collapse of the automobile industry.'

I realise this is not the sort of news likely to incite a Merry Christmas but it seems to me to be at the root of the dissatisfaction verging, in Detroit, on despair which defeated Jimmy Carter and put Reagan in. Detroit was chosen by the Republicans as their convention city. It was a bold move. For nearly 50 years, Detroit, as the capital of the automobile industry, has been a Democratic stronghold resisting, but not overcoming, the preference of the rest of Michigan in the six times the state went Republican.

In the Nixon landslide of 1972, when only one state and the District of Columbia went for the Democrats, Wayne County – of which Detroit is the capital – voted for McGovern. The workers of Detroit have been called 'the last standard bearers of Franklin Roosevelt'. Reagan was smart enough to quote Roosevelt there and hail him as the sort of leader America could use.

The auto workers, this time, threw ideology to the prairie winds. Maybe this angry, confident and amiable man could, as he boasted, turn things round and get this country moving again. They voted for him. So, he must know better than anybody that a call from the despairing workers of Detroit is one he cannot pass up.

By contrast, the continuing plague of the Iran hostage crisis is something that everybody feels sad and frustrated about but it is not the anxiety about the economy that is on everybody's minds and that will soon reveal its intensity in the next month or two in Detroit.

By the way, the Reagan Republicans have taken to hailing Franklin Roosevelt and Harry Truman as wonder boy presidents. It may delight you to know that Harry Truman is alive at 83 and well and more irascible than ever. He lives up in Mount St Helen's in the state of Washington and, after the volcano erupted, he saw the lake at his doorstep vanish and the beautiful mountain opposite crumble and turn to ash. He's now the only living person at the very centre of the eruption. The state wants him to leave and he retorts, 'I buried my wife and my daughter and my dog here. I love this country and by God I won't go. It will take an act of God and the Congress to move me out.'

He then turns to his old pianola, puts in a roll and taps his old feet to, 'My blue heaven.' His name, I swear, is Harry Truman. Happy New Year from him and me.

This transcript was typed from a recording of the original BBC broadcast (© BBC) and not copied from an original script. Because of the risk of mishearing, the BBC cannot vouch for its complete accuracy.

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