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Tuesday, November 14, 2006

Big 3 Auto CEO's Meet With President Bush

Stock Tickers: GM, F, DCX

The heads of each of the Big 3 Auto producers held general and prelininary discussions with President Bush today, but said this was very general and the start of what will hopefully lead to ongoing discussions.

-Richard Wagoner of GM
-Tom LaSorda of Chrysler
-Alan Mulally of Ford

They discussed currency imbalances as an issue. They specifically noted the Japanese Yen is significantly undervalued, which puts Japanese exporters at an unfair advantage over US auto makers.

The Big 3 said they also support renewable energy initiatives and went on to say that they could get half of their fleets to ethanol or dual-fuel compatible by 2012.

They also noted that a healthy auto industry was critical for a US economy. The Big 3 are at a competitive disadvantage from currency, regulations, costs, employee costs, and healthcare. The Big 3 also told Bush they were not looking for a bailout, at least that is what Mullaly said.

Since the year 2000, there have been something to the order of the Big 3 having 68% of auto sales in the US down to 57% last year, although those figures are paraphrased from earlier and may not be exact. One issue they did not really address about the currency is that some foreign owned auto makers like Toyota (TM) and Honda (HMC) are now making autos here in the US with non-UAW (United Auto Workers) US workers, so that currency issue may not be the real deal.

This is going to be just one of several ongoing areas that will run into the future on a US macroeconomic and systematic basis. US auto makers are generally shrinking right now and their market share is likely to follow that trend. There are still questions about the US auto industry as far as if 3 companies are genuinely needed down the road, but that is another controversial discussion for a later date.

By the sound of the short media conference after the discussions with President Bush, it seems that was indeed general and nothing solid was produced other than starting some dialogue.

Jon C. Ogg
November 14, 2006
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