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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Today, these 3 auto giants are before the committee and tomorrow, there will be a thousand more Companies big and small who will line up for bail-out. And what about those individuals who lose their jobs? Who is going to provide the bail-out?
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Why not ask everyone that has a job tied to the auto industry to pony up some bucks. Will any of the retirees or current workers be willing to throw $2-5K of their money into the companies to keep them going? I worked at GM in Kansas City back in the late 70’s. I couldn’t believe the mindset of the unions back then and the horseplay that went on. Heck on friday nights, there was whiskey bottles stuffed in carberatuors, there was apple cores and trash stuffed inside fender wells, I watched a union worker shoot long screws through the roof of cars mounting dome lights because he was out of the right length - it wasn’t his job to get the right screws. There was no sense of ownership by any of the union employees. I was paid over $18.00 and it was 1978. That’s what the current Alabama Hyundai workers are making today. Yeah the money was good back then, but as a young man I didn’t think the industry would survive with people like that. So I left and 30 years later guess I was right. The industry is on the verge of collapse. I worked 20+ years for Honeywell in the maintenance department for a non-union plant. We could send 1 maintenance man out to change a pump - something our counterparts at union plants couldn’t do. They would have to send out an electrician to unwire it, a plumber to unhook the plumping, a mechanic out to remove the pump, a laborer to clean the area, and then do that in reverse to install a new pump. We would send one man out and do the job in just a couple of hours. The unions have structured the jobs in detroit with such stringent guidelines it’s a wonder they all have had jobs this long.
Hi
i think that somebody will have to take the poison pill and let ford and gmc fail and then see what appears on the other end of the tunnel But i don’t think that current management of both these company’s have the courage and the balls to take that action with all the money spent rescuing these companies we could start from scratch and have maybe 5 or 10 smaller companys but more specialised and more dinamic.
Is there only two alternatives??? 25 billion bridge loan or Chapter 11 ? Is that all this world leader of a nation an come up with? Come on, we are smarter than that! I am sure there are many plausible alternatives besides those two that might be far better alternatives. Our legislators can put together a package of anything that they want - they have the power to put pass a temporary emergency legislation law bill for automaker assistance.
One senario might be: structure a bridge loan to each automakers need with tight conditions on that loan. Loan conditions being: During the loan and until the loan is fully paid back (1) Senior executive management compensation will be reduced by some percentage. (2) Middle management compensation reduced by some percentage (3) Union workers compensation and benefits reduced by some percenage. (4) An agreed upon independent audit of the company to review operations and make recommendations that would lead to future viablilty of the company- possible cost reductions -reduction company model lines, etc.
Also, an assigned tight government company/loan oversight board uring the loan period to ensure that the company is following guidlines duringthe loan period. The oversight oard wouldhave the responsibility of making timelyreports to congress /american public. Any future assistance would be dependent on progress of the company to progress in becoming more financially independent.
Today, these 3 auto giants are before the committee and tomorrow, there will be a thousand more Companies big and small who will line up for bail-out. And what about those individuals who lose their jobs? Who is going to provide the bail-out?
As a person who would be affected by the bankruptcy of the auto industry, you might say that I have a vested interest in their survival. Well, I do. It is true that the auto companies should have been making hybrids and alternative fuel vehicles years ago, instead of the SUVs and trucks that are currently manufactured. And as is the case, when the public’s requirements in new vehicles changed, the auto companies were slow to respond.
As I said, I do work in the warehouse of one of the auto companies. I do this not necessarily by choice, but by neccessity. The area where I live has high unemployment due to a lack of jobs. I drive 50 miles each way every day to work. Again, not by choice, but because I have to. It’s the only game in town, so to speak. It’s easy for senators and others who don’t rely on the auto industry for their livlyhood to say “Let them go under”/ perhaps you’d feel a little bit different if you had to depend on these “dinosaurs” to support your family and to survive.
Every employe of Big three should consider themselves as owner of their company with highy motivated without any expectation regarding their salary by great sacrifice by reducing their monthly salary, benifitis by 60 % of their cost to the company. It should starts from the top to bottom. Big support needed from unions, directors should relenquish their salary to 60,000 dollars maximum. The challanged can be met by combined efforts without giving any unfair advantages to the HR department, suppliers, directors. Great organisations cannot built up without great sacrifice, emotional attachement to the company, determination.*
Mike posted an excellent comment! I couldn’t stop laughing.
How about they sell the jets, all of their real estate, and more assets they all have combined, and they will come up with the money they need. If all three companies sold all the extras they have and do not need,no, we should not have to bail them out.
Why didn’t they design the smaller, more fuel efficient car 10, even 15 years ago, when Toyota was on the rise?These idiots don’t know how to compete I guess.
Japan must really be laughing at us now. Hey, maybe the Japanese will come over here and take over the auto industry.
Sell your assets!!!
See, this is where a life style of GREED will take us.
Given that the CEO’s have collectively stated they are burning cash at a rate of 8 billion a month, the proposed package will buy them a further 3 or 4 months. Where is the plan to say how they will restructure so significantly that this will be reversed? I don’t believe it is possible for that to occur in that timeframe.
Perhaps the US should have a look over the shoulder at what happened in the UK when they tried to rescue the car industry there. Most of those companies wound up nationalised, then collapsed anyway.
It cost hundreds of millions of pounds, and achieved nothing.
You have Chapter 11 in the US - they should use it to rebuild a competitive industry.
Let e’m go, they do not deserve a bailout. They are ignorant and can’t change thier old ways. Coming to town to ask for money without a future plan for viability is like coming to a shoot out with a pistol and no bullets.
Send e’m home to work it out amongst themselves and may the best man be left standing.
First question they have to ask is “why have we lost market share, doh”
OK, if the bailout is granted, is the “top management” willing to take a 80% pay cut or take home a meager pay check like that of a shop floor engineer?
Didn’t the Airlines file for Chapter 11 a few years ago? And did the economy collapse because of it? Even Mitt Romney, known for his ability to help companies in distress, has said the auto industry needs to file Chap 11. They need to clean out those overpaid, uncreative minds that can’t see beyond their perks! They need to bring in new people with ideas other than more gas guzzling SUVs.
Arguments for and against any manufacturing industry assistance program is a moot point for the next 2 months. Paulson has made it abundantly clear that he intends only to bail out Wall Street while the rest of the nation waits for the trickle down. No one will miss him when he is canned in January.
As for US automakers, they have no excuse for their incompetence. Their product portfolio for the North American market is shameful, with only a handful of vehicles that achieve over 25 miles per gallon in mixed city/highway driving. Now that they can no longer sell their oversized gas guzzlers and retro-muscle cars, dramatic changes are needed. This would be nothing less than a complete reorganization of the auto companies, including not only major divestment of plants and employees at all levels, but also substantial change in corporate mission and operating procedures. One could argue that it doesn’t matter who does this (federal officials, the bankruptcy court, or new private investors), it will be painful and expensive for everyone.
But events in the last two weeks should alert us that asking for assistance from the Bush administration doesn’t gain you anything if you aren’t in political favor with the administration. What’s more, any bailout architected by Paulson would throw money at the problem-makers without forcing solutions to the fundamental problems. Paulson has done more damage than good so far with his “TARP”. He as actually made matters worse. The bailout money that has already been blown on the likes of AIG has gone toward everything but what it was advertised to remedy, instead being funneled into stock buyback programs and executive compensation. Has anyone at AIG been fired for their shady dealings? Clearly any plan that allows the Bush administration to manage assistance for automakers is a recipe for more disaster.
Let us hope that world leaders lay out regulation and incentives that help private industry create long-term value for everyone rather than volatile short-term paper wealth for the politically connected.
Back in the late sixties - early seventies, companies like Honda, Toyota, Datsun began to compete with U.S. auto makers with cars that were affordable and offered very high gas milageage per gallon. Why should we bailout companies like Ford, G.M., or Chrysler for not competing for thirty years? why are they even making “Hummers” or SUVs period? And then charge us just as much for it as an imported vehicle? Let them fall, they have already failed and put only the workers on welfare instead of the CEOs and entire industry.
The tree company that I’m working for is struggling right now, can we get a bailout?
Absolutely Not!!!
This is not a bailout of the US automotive industry. It is simply a bailout of the UAW who destroyed the US auto makers in the first place. Palosi and Reid would never have survived their pathetic political careers without the unions or the mentality associated with it, “create a sense of protecting the little guys,and we can exert tremendous political power unfettered and our greed will go unchallenged by the masses”. The Dems want the continued support of the unions and will do and say anything to get that support. Are the unions going to get something that the Dems promised them again,this time around? Do the Dems shake in their shoes thinking maybe they can’t deliver to the unions. And now that the Dems have won this election, skewed by the MSM, will we also be hearing bail-out requests from the Main Stream Media? Probably, since they are having such a hard time selling their liberal rags and are themselves failing financially. What about free enterprise and competition among all entities of the WORLD. We no longer have even one US auto manufacturer who is in the top ten rankings of auto producers. Let the dinosauers die. Let free markets rule.
“During a hearing Wednesday before the House Financial Services Committee, Rep. Brad Sherman, D-Calif., asked the three auto chiefs seated at the witness table before him to raise their hands if they had come to Washington on commercial airliners. No hands went up. Then he asked if any planned to sell their corporate jets. Again, no hands went up.
Sherman and Rep. Gary Ackerman, D-N.Y., told the auto executives they were having a hard time justifying to their constituents bailing out companies whose chiefs fly around in expensive private jets.
Ackerman said there was “a delicious irony in seeing private jets flying into Washington D.C. and people coming off them with tin cups in their hands.”
Unfortunately, the auto industry has been running hard for years just to stay in place and hasn’t been able to. If the companies were worth anything someone would have stepped in and bought GM for cheap at $3.00 per share. Everything sells at a price if it has ANY value. GM isn’t worth the debt obligations on it. A prebankruptcy government loan is a transfer payment from taxpayers to GM’s creditors and employees. Like the airlines, once one of them goes through bankruptcy and comes out a competitor without all the baggage, it will make it more difficult for the others to avoid the same fate.
and just where do people think this pay back money will come from!! the people need to take a stand and not put up with it, if all would stand together it Could be done…america needs to wake up, and all the CEO’S should take a short walk to a jail.. we the people will pay for it, just like all the rest of the crap our taxes go for and we have no clue what they spend it on.. they could have made cars that cut fuel cost, They did not want too..
The Goverment has a limited role - Guaranteeing the pensions and health insurance for retirees and displaced workers.
Reorganizational bankrupcy is required so the Big three can emerge with cost structures competative with forign competition.
I fear the government will pay to keep 3,000,000 people or so working but the product will pile up with no buyers. Cars need customers with money to justify their production. The auto makers can shift production to build trucks and construction equipment for government make-work projects as part of a real bail out. Giving the same old auto executives more money to continue business as usual will do more harm than good.
The auto market has people who don’t need cars and people who can’t afford to finance cars.