Bailout for automakers?

November 17, 2008

automakers

As Congress debates legislation to help struggling automakers, many Americans say they are uneasy with the plan, arguing that while it may save jobs, it would reward companies for pursuing bad business practices. Some even question whether automakers will be viable, even with support.

“They need to restructure. If they get bailed out they are not going to do it,” said Eric Smith, a paint contractor interviewed in Chamblee, Georgia, on the outskirts of Atlanta.

U.S. automakers say federal aid is vital to their survival, and there could be devastating ramifications for the broader economy if the sector is not stabilized.

“This is an issue of the whole auto industry, if that becomes under severe pressure, the impact on the whole U.S. economy will be devastating,” GM Chief Executive Rick Wagoner said in an appearance on a NBC-affiliated television station in Detroit.

Retired Gen. Wesley Clark says that a rescue of U.S. automakers is important both economically and for national security. In a New York Times opinion piece, Clark wrote that the U.S. auto industry has played an important role in successive military campaigns, from World War II to today, and its ability to continue to develop new technologies is imperative for national security.

Some are calling for executive shake-ups if it would ensure congressional backing for a bailout. “If it was the difference between getting this kind of support or not, obviously the management should consider resigning,” Carl Levin, a staunch industry ally, said on NBC’s “Meet the Press.”

As Democrats finalize a rescue plan, the question remains: should U.S. automakers be bailed out?

(Pictured above: G. Richard Wagoner (R), chairman and CEO of General Motors, testifies next to Robert Nardelli (2nd R), chairman and CEO of Chrysler, Alan Mulally (2nd L), President and CEO of Ford Motor Company, and Ron Gettelfinger (L), President of the United Auto Workers union, before the Senate Banking, Housing and Urban Affairs in a hearing on “Examining the State of the Domestic Automobile Industry,” on Capitol Hill in Washington, November 18, 2008.  REUTERS/Molly Riley)

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184 comments

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yes the auto big 3 should get help.they are the backbone of our country!!!!

yes the auto big three should get help!!!!

Automakers should not be bailed out!!!!! They were working on the red numbers before recession hit us. Its like trowing tax money to the waste!!!! They are not efficient why give them money? Let them solve there problems by themselves!!! US should stop playing nanny to private business. Maybe they will get to grow up!!

Posted by Nina | Report as abusive

Several weeks ago I saw a picture in the newspaper of a group of soon to be laid off UAW auto workers leaving their jobs. For the most part they were overweight,middle aged men smoking, needing haircuts and a shave, wearing sweat shirts, track pants and baseball caps on backwards.
These guys were making $35.00 or so an hour and pissed at their employer.
Gee, I wonder why the industry is in trouble?

HELL NO! it will only prolong the inevitable. the big three are run like they are still in the 1950s. let them fail, deal with the results and a stronger country and economy will come of it eventually

Posted by richard kadel | Report as abusive

Why bail out a company that has huge manufacturing interests internationally? GM is hardly a solely American company any more. The 2003-2009 Monte Carlo, Impala, Grand Prix and Buick Regal were all manufactured in Canada. Holden auto of Australia now manufactures most of Pontiac’s line and many of the Vauxhall vehicles sold in Britain. Many of the engine blocks are now cast and machined in Mexico. GM is already investing heavily into SAIC of China. GM is not going anywhere but out of the USA. The UAW pension program is the crippiling factor for their bottom lines. You can bet the big three no longer have interest in supporting big labor. Instead you will be doing nothing but propping up a retirement program on the rest of Americas back. Let the company fail.

Posted by Matt | Report as abusive

No. This trend toward national socialism is getting way out of hand. Rather than a bail out as a vital industry to our economy and to prevent massive job losses, they ought only to make loans which are no different than the companies would have gotten from a bank.

This industry made mistakes that were easy to identify a few years ago when they decided that making the more then profitable trucks and SUVs were preferrable to correcting the product mix to reflect the growing reality of international competition and energy issues. If they are to go bankrupt in order to effect the necessary restructuring to make them into competitive businesses the government is in no position to interrupt the capitalist market correction. Major airlines managed themselves through bankruptcy and Delta went on to acquire one of it’s competitors. This is unnecessary government intervention.

Posted by Ray | Report as abusive

I see the auto workers are going to end up being shafted thanks to the incompetence of their bosses. History repeats.

In the late 60s and early 70s the US automakers didn’t start making small cars….and when the oil shocks hit they were badly caught out. OK…maybe that time it really was a surprise. But this tmie it wasn’t.

I – me – saw this coming 5 years ago. Bush’s war and tax cuts would SURELY lead to huge deficits, higher interest rates and a falling dollar. In economic terms, this is like can you spell “D’uh”? The new element compared to past cycles was “peak oil”…which isn’t really peak oil, but a lag between racing demand winning out over lagging ability to discover and supply. Plus all those US refineries shut down over the past 20 years to support higher prices by creating seasonal bottlenecks.

Never mind all that – did the US automakers plan for smaller,more fuel efficient cars? Did they back laws that would recognise the need to use less oil – for the environment, national security and to support a move to smaller, more efficient cars in advance of higher oil prices?

No. They built SUVs and Hummers and all sort of things no one in their right mind outside the US would ever buy…..and no one at home would either once oil became more expensive…and as it SURELY would.

These people don’t deserve saving….but I can certainly understand why the Unions are wondering why THEY have to pay for their bosses’ incompetence.

No, No, No, After the President of the Auto Workers Union said that they were not willing to make concessions to help out I say let them stew in their own juices. If the auto makers file for bankruptcy how much do you think they will be forced to cut. Just look at the airline workers after the airlines filed. The bankruptcy couldn’ say yes fast enough to the airlines to cut wages and benefits.
The US Auto makers have screwed the consuming public for decades by putting out poor products with poor designs ever since I can remember and that goes back to the 1950′s meanwhile the Japanese have captured the market buy producing good auto with good design that the public wants.
I’ve only owned 2 foreign auto since I bought my first one in 1962, but my next one will be foreign unless the US makers make a 360 degree change.
By the way I am pro-union and pro buy American but I’ve simply had enough.

Posted by Phil | Report as abusive

From reading the early comments …most seem driven by nationalism … a thing of the past … such pride, like religion, is often the cause of many of the world’s problems. We are no longer in “Kansas” … we are becoming part of one world … like it or not. Assistance is needed, but with restrictions … no bonuses, no raises for labor, and no dividends for stockholders.

Posted by John | Report as abusive

NO, NO, NO, the auto industry cannot be bailed out. They have resisted change for the production line. They continued with the gas guzzler cars, and now, they refuse to make concessions. Yes, the unions backed Obama, but we should have to pay for a bailout. The vehicle and parts are not even made in this country too many times. Let the strongest survive or sink. Stop the dividends and high bonus and benefit packages. Stop paying someone just to show up for work. They must change like the rest of America.

Posted by Mim | Report as abusive

approve of keeping the automotive industry viasble as a matter of national defense and fiscal policy.Mass unemployment must be avoided.

Posted by sid millman | Report as abusive

Exactly when did making cars become vital to national security? These dinosaurs should be forced to close plants, cut costs and lay off workers the way any other business does in a recession (Citigroup, Circuit City). Adapt, evolve or stop making cars. 25 billion dollars just gives them more time to fail, and the sooner they fail, the faster they will be acquired by another multinational competitor who will retool the assembly plants, rehire valuable employees and start ordering parts from suppliers. Sure some people will lose their jobs-they’re going to whatever happens-but the US auto industry will not disappear. And if pension plan health care costs are included in the acquisition, the retired autoworkers are protected. Crisis? What crisis?

Posted by Robert Bornhorst | Report as abusive

They should not be bailed out. They are part of an \”old\” economy based on perpetual growth in consumption. This economy must eventually be replaced by a more sustainable model, and before we can get there we have to scale back seriously.

The sooner we start scaling back the better of we will be in the end.

If they get bailed out now, how much time does it buy before they are in even deeper sh*t?

Though the consequences of them failing now will be severe, no matter we do, they will fail anyway. Its better we deal with the consequences now rather than later.

Posted by picoday | Report as abusive

The auto industry has spend a lot of valuable financial resources lobbying for lower safety and fuel standards than investing in technology to get out of the funk like the Japanese companies are doing. This is remniscent of of the Pinto Days when the US automakers lobbied heavily against car safety standards rather than fix the fuel tank issue. This industry has had a poor record of survival and will use the tax payer money on lawyers (to lobby) rather invest in technology to become profitable.

Posted by Anant | Report as abusive

yes but the end product must be improved and unions must backoff from excessive demands and control

Posted by Pete Perry | Report as abusive

I can’t believe how stupid, blind and idiotic most of the american people are showing themselve’s to be! GM is not asking for a free handout like your wallstreet buddy’s! GM wants aloan to not only save it’s self from distruction, but try to save alot of american jobs. If you forgotten what that is. I bet most of you probably shop at Walmart!!!!!Sending most of the american money to where you ask????? chinia…not the U.S.! THIS IS NOT INTIRELY ABOUT THE AUTO WORKER , IT’S ABOUT EVERONE IN BETWEEN. The steel’glass,rubber,plastic,Bank’s Sear’s the locale carpenter,the locale mechanic, your locale home heating & air conditioning maint. Guy, just something as simple as going to your personal Barber.Not to mention where would the healthcare go with over a million job’s gone?with no one buying healthcare, because no one has a job!!!!! But maybe we could go to chinia, for healthcare!! If you thought the Great depresstion was bad with only almost a 30% unemployment rate, Try about 80%+ out OF work lost there pention’s medicare, medicde, S.SUCURITY BECAUSE THERE WOULD’NT BE NO ONE WITH A JOB LEFT TO PAY SS.I can’t believe this great county we live in, after 911,,,,,were like lamb’s being led to slauder!!! And an other thing It’s the dam GREED OF THE CORPARATE CEO’S THE REASON YOUR AMERICAN CAR’S & TRUCK’S COST SO MUCH!!!!!!!!!!!!!!!!!!!!! It’s not because of the laber cost like the ceo’ make us to be. It’s the fat cat’s ceo’s sitting in there Ivory towers squeezing the life force out of there LABOR, BECAUSE THERE TRYING TO MAKE A FAIR DAYS WAGE! Why can’t you (americans) see it!!! WAKE UP PEOPLE! It was the auto worker, carpenter, janitor,electrition ect.ect. working 12 -16 hour shifts so the son’s & dauters could go to collage and get so SMART…..Now you want to trow us to the curb? Wake up !who set you up on your way to your Ivory tower? And what type of job did your mom & dad have. This is Truely the (ME GENERATION) NOT THINKING OR CAREING ABOUT THERE AGEING PARENTS,OR THERE GREAT,GREAT GRAND kID’S….I only hope and pray this new PRESIDENT CAN LEAD US TOWARD’S NEW PROISPERITY & UNITY AS AMERICANS. HOPEFULLY WE CAN TURN THIS COUNTRY AROUND AND START EXPORTING MORE THAN WE’RE IMPORTING! AND CHARGEING A FAIR EXCISE TAX FOR IN COMING IMPORTS. THE WORKING CLASS PEOPLE HAVE GIVEN & GIVEN&GIVEN, NOW HOW ABOUT THE FAT CAT’S TOP 20% START GIVING???????? FOR A CHANGE.

Posted by MARK | Report as abusive

It’s imperative that Ford and GM be bail out as soon as possible and let Crysler merging with another foreign auto maker to unclog our economy.

Posted by Lewis Chavez | Report as abusive

Yes, let’s bail everyone out. Where is our American Spirit? Let the big 3 sell their Gas Guzzling SUVs at cost. They really should’ve been making Fuel Efficient Autos (Years Ago). I think Bush should just “give” every Man, Woman and child $25,000 (Tax Free) then I can buy a new Vehicle. That will help Bail ‘em out and we’ll all be stylin’. Also, give every Family $250,000 (Tax Free) so we can all buy a new Home. That will end all the Fore-closures. Come on Guys, just fire up those printing presses, who cares what the rest of the World thinks!!!

Posted by Zeppelin | Report as abusive

So $700 billion for the finacial sector is alright, but not a meer $25 billion for the auto industry? Unfortunatly, we have to bail out the auto industry. Say the entire world is against us and we are at war, how will we manufacture the equiptment we need to defend ourselves, idiots? The same reasons we don’t want to rely on the rest of the world for oil apply here.

What needs to be fixed is the way the auto industry is run. Unions need to be out – that way we are not paying someone $35 an hr to literally watch paint dry while also funding a 100% pension.

Also, do we really want to lose another 200,000 jobs? You may think yours is safe but for every job lost, losing yours becomes closer.

Posted by Mark | Report as abusive