Detroit 3 Fight Bankrupt Rumors, But Credibility Slip is Showing

Domestic automakers have been compelled to state in recent days that they’re not planning to file for bankruptcy — which unfortunately for them only serves to keep the word “bankruptcy” appearing in the same headlines as Ford, GM and Chrysler.

Spokesmen like Chrysler’s Jim Press and GM’s Rick Wagoner used terms like, “without merit” and “inaccurate” to describe speculation that the automakers are burning through so much cash in the present sales downturn, they would be better off filing for bankruptcy.

It probably is a preposterous suggestion. But these are preposterous times, starting with $4 gasoline, which would have sounded far-fetched a year ago, even after three years of gasoline price hikes.

The automakers seem mystified — maybe angry, reading between the lines — that the bankruptcy rumors are flying, and frustrated that the rumors don’t stop when the Detroit 3 say so. It’s understandable they’re frustrated, but it’s also understandable that the rumors are out there.

Where the Detroit 3 are already overdrawn is credibility, at least at this high, corporate level. They’ve been declaring for a generation that the latest restructuring plan, merger, acquisition or globalization plan will put things right, if only people will be a little patient. When that fails, another restructuring comes along. Lather, rinse, repeat.

At this point, people can be forgiven for doubting, when the companies declare again that they can see the light at the end of the tunnel.

In a short time, Ford has ditched Aston Martin, Jaguar and Land Rover, which it spent billions to acquire and billions more to try and fix. Daimler divorced Chrysler, undoing the biggest industrial merger in history. GM sold GMAC, which promptly sank in the subprime mortgage mess, and it’s probably dumping Hummer. Not to mention the current production cuts and layoffs for all three domestic automakers.

These are all big-time distress signals. It’s no wonder people are trying to connect the dots to see where all this leads.

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