Jesus, Chrysler

Like Obama, I feel the anger choking my throat, only it's Chrysler's latest that has me fuming here in Canada. The old-style auto industry is on a highway to hell, and it's taking us down with it, one way or another.

While a lot of people would like to pin the blame on auto workers' wages or pensions (or both), the price point of American cars isn't really the main business issue the companies face.

The facts are that the drop in demand isn't going away, the companies haven't kept up, the market is over-saturated, and we aren't impressed with the cars. The recession has made it worse, but it's largely bad management that's created an unsustainable auto sector.

That's just one reason why the threat from Chrysler president Tom LaSorda, who told a Commons committee last week that Chrysler would leave the country unless it gets what it wants, was so outrageous.

If you thought the tone was akin to that of the financial industry leaders early on in the collapse, there's a reason. Chrysler is owned by Cerberus, a huge capital management company.

"We hold ourselves and all of our portfolio companies and management teams to the highest ethical standards and business practices," proclaims the Cerberus website.

Right. It is truly offensive that the leader of a corporation that's been losing market share, not just because of the recession but for 15 years, has no self-reflection or regret to offer when he asks for a $1 billion tax settlement on top of $2.3 billion in government loans, plus new, deeper wage concessions from the CAW.

Auto industry expert Dennis DesRosiers says he was shocked for another reason as he sat behind LaSorda during his testimony. "It's not something you say in public."

If he carries it through, says DesRosiers, "the Canadian consumer will leave the product. He risks turning the ordinary buyer against Chrysler. And the dealers are feeling it."

Would you give the keys of our economy to someone who's that immature? Oops, he already has them.

Chrysler is a money pit. It has no viability in the long term outside of the Fiat deal that's currently on the table. That deal will give control and 38 per cent of the company to Fiat in exchange for that company's fuel-efficient car technology and no money whatsoever. Plus, Fiat will only take this sweet arrangement if there are government loan guarantees and no tax liabilities on the books. Hence the ill-mannered ask by LaSorda.

The billion-dollar tax request has me gasping. What about the rest of us who pay our taxes? I take my query to DesRosiers, and I admit that to some extent he chills me out.

"They are not innocent on the tax issue," he says. But the dispute with the taxman is over "a grey area" of the tax code called transfer pricing. Long story short, Chrysler argues it paid its taxes, only it did so in the U.S. Only a protracted tribunal process could sort out who's right or wrong.

Still, we're in a barrel over the falls. Whole communities are doomed if we don't invest in forgiveness and shaky loan guarantees. But even if we do, the jobs and the wages will fall like rain. Which plants will Fiat retool and which will be shelved? No one knows, or at least they aren't saying until the money comes in.

We're in a classic sunset industry moment. If all that government does is keep its eye on the short term, we're going to continue pouring in money for ever-shrinking social returns. If public officials don't make a bet on the future, it will all be good money chasing bad.

If we're going to invest in auto, we need to help bridge a gap, not just jump over the deep end.

Everyone knows that if we can afford them, we'll want electric cars. They could de-smog our asthma-inducing air and save our health while reducing climate-change pressure on the atmosphere. It's a no-brainer. If we cast at least part of our tax-dollar vote for the electric car, we could seed an industry that will settle in -- profitably -- for the long haul. Of course, the feds won't be doing that.

But luckily, Ontario has signed on to lay the groundwork to get electric vehicles on this province's roads.

So while Ottawa drains the coffers on old auto, we can start building the foundation for the new industry we need, right here, right now. But there's more to be done. Let's go, Toronto.

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