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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The USA central bank is the enemy… What are they thinking?
No stimulus yet? – Screw the people, protect our money.
Selling housing debt forward? – Screw the people, lets make a quick buck.
Huge US debt? – Screw the USA, let’s make a quick buck.
Bail outs? – Same banks that own your FED.
Why is this all happening? - Because Americans do not own America.
USA take your central bank back, they are screwing you blind.
Look at who owns your money, the shocking truth will show itself.
They sold and are still selling America!
The worst is still coming, Americans are now going to be asked to fight for their central bank!
WAKE-UP!
If the CEOs are culpable of mismanagement, and they may very well be, at which point do we ask investors to take responsibility for their poor investing?
Everybody, you gotta read the post by somebody named gaella, 11:47 on Nov. 20th. Humor like that really sums it up. Congrats on a great little piece of writing, and thanks for the grin you brought to this reader’s face. The last line in Roundup-Logan’s piece, 7:01 a.m., was another that’s right on the button. Way to go, you two!
we need to wake up and start supporting our country!Eevery other country in the world has pride in their industries like japan does in toyota.We need to take notice before all of are industries gone in the U.S . We need to support and protect our country. Unlees we want to start living like a third world country.Where their is no industries only hand outs from the U.N !
Similar to the banks and financial entities, greed is the business model. Why should we, the taxpayer, continue to save these arrogant shysters, with nothing to show for our efforts except depleted portfolios and increased taxes? I agree with Jubek, let the auto industry enter into a structured bankruptcy and no taxpayer bailout. Enough already!!!
Yesterday, Nancy Pelosi says bankruptcy is off the table. Today, Obama said that he wants a form of “structured/revised bankruptcy” for the Big 3. I didn’t vote for Obama, but I applaud this position. It is a shrewd and effective one. Also, it tells Pelosi that he, and not she, is running the show. Anyone who squashes Nancy Pelosi will get my support. Do it, President-elect Obama.
Offer the auto companies workers substantial unemployment benefits. Offer the companies limited funding while they redesign more environment friendly vehicles; executives get the same compensation as the workers, no bonus plan, no stock options. Benefits fall gradually and drastically after three years. Spend a large portion of the bailout on construction of roads, bridges, etc., and another large section for innovative uses of solar and other alternative sources energy.
Talk about credibility, Nancey presides over congress who is over a TRILLION dollars in debt and has the gull to question the CEO’S of the auto industry. She will get on her 747 and fly to Cal. every weekend. Yep, typical government austerity program.
This is getting absurd. Congress, and more pointedly the Democrats are dragging this on trying to find a good excuse to get this bailout through in order to save their relationship with their bed-fellows the unions. If these companies file Chapter 11 they can restructure and reorganize and come out better in the end.
The Big 3’s problem is years of extremely bad management and equally bad marketing of their products combined with too much government influence and regulations and union demands all of which has only made them non-competitive. If anyone doesn’t believe this then explain to me why the Japanese can produce cheaper in U.S. than Detroit can, and actually produce in Japan and sell here cheaper.
Congress can’t admit that their trying to solve the auto industry problem is really just addressing the symptons and not the disease. The reality is that the disease is the credit mess plus the excess number of unsold houses which if that isn’t solved they won’t have to worry about Detroit, they’ll be history. Without solving the credit issues nobodys going to buy cars regardless where they are made, or buy anything else for that matter.
Paul
Butler PA
What is wrong with the US,
You want your Government to give your money to obscenely rich business people, when you can’t even go and see a Doctor in your so-called Democratic country. Give the 25 Billion to small enterprising Business’ that employ many more people and might come up with some new revolutionary ideas. Don’t forget Henry Ford. The belief that large organisations create more jobs is a myth you gullable people all fell for. Take a minute and have a good think about it. Who employs & supports most of middle America? It’s not the corporations, it’s the small business’. Remember the small butcher, baker, fruit shop. How many families did they employ, many more than your mega stores of today. Remember the bulk of a corporate profits go to shareholders & company executives not to the workers. Why bail these fools out, let them sink and give other people a go. Do you realise that corporations usually pay less than 10% in taxes, while the individual or small business has to pay 30-50%. These bail outs are just a redistribution of wealth from the small business & taxpayer to the mega wealthy, and let me tell you many of the owners of your corporations aren’t even Americans. Don’t be fools.
The American auto industry is well worth saving, for many reasons. One reason is that for the past decade Detroit has made heavy investment and steady progress in improving its competitiveness, what it calls “altering the DNA” of American cars. US automakers spend $22 billion annually on plants, equipment, research and development. Breakthroughs are at hand in developing alternative fuel propulsion systems, and our national well-being and security depend upon seeing them through to completion.
If we allow U.S. automakers to go under out of anger, resignation, or ideology, it will only mean all the work and investment of the last decade will be ceded to our foreign competitors instead of being plowed back into the U.S. economy.
Another reason is the industry’s importance to the job market and the wider economy. Automobile manufacturing directly employs a quarter of a million workers and indirectly about one in ten U.S. jobs are related to some degree to the automotive sector, according to GM estimates. So the effects of a collapsed U.S. auto sector would not be limited to Detroit – they would be magnified as the ripples spread to related industries.
If we allow U.S. automakers to fail, millions of retirees depending on auto company pensions will be at risk and auto manufacturing jobs will disappear. The ripple effect won’t end there; millions of jobs in related sectors, such as U.S. manufacturers of steel, aluminum, iron, copper, plastics, rubber, electronics, and computer chips, will also feel the pain.
Worse yet, the promise of a meaningful future for American manufacturing would fade. As that promise dims, the role played by manufacturing jobs as a passport to the middle class would likewise disappear. Simply put, we can’t have them fail now. Alexander Shlepakov
I just read the last four posts and they are all excellent. A few days ago I emailed my Senator, Patty Murray, and told her “Let them go bankrupt, don’t spend my tax money to save them.” The American auto industry has insisted on making cars that were planned to fail at around 98,000 miles, as did my 1982 Buick Century. After that, I never bought an American car again, and my family had always been a GM family. Let them go through bankruptcy reorganization, get rid of the dead weight, and start making cars that will last and that are eco-friendly. Get rid of the corporate jets and the huge CEO salaries, and reward innovation and the employees for making a great product. If they can’t do that, let them all go and instead spend money to help retrain the people who used to work for them. No one would bail out any of us if we operated the same way the American auto industry has!
Cerberus Capital Mangement must be doing handsprings of joy that the US Gov’t is saving their A–, Now the taxpayers have put a safety net under the automakers so they can continue their corporate culture of “What’s good for General Motors is good for the country” Not so, wish our Congress would bit the bullet and let them go bankrupt so they could reorganize in some intelligent mode. Is that too much to ask?
Absolutely, we should provide goverment financial support for the U.S. automakers. They are critical to our economy. However, any suppport should be conditioned upon a complete re-negotiation of the labor commitments of the automakers, reducing those commitments in terms of wage rates, pension commitments, health insurance, termination protection and other items to levels which make them specifically comparable with other major auto manufacturers, particularly the Japanese. Without that change, any bailout will fail and should not be given. Also, both senior and middle management should be required to accept long-term cuts in basic compensation at the level of around 20%, with future benefits to be based on corporate performance focused on profitability.
Here’s and idea! Let Chrysler die, and give GM and Ford $50Billion but only AFTER they file for Chapter 11 so the market will know they will emerge an emerge strong. That way they won’t die while in the courts. This will send a strong message of support while they “clean house”.
Although I believe that the situation the auto companies find themselves in is entirely their own fault, (in 2005 GM purchase Hummer and closed their EV electric car production one month later. The EV could have save the company this past year - See “who killed the electric car”), We are past the “let them eat their own stupidity” stage and we need to give them the money for Tax Payer self interest and the over all health of our economy. That said, It’s clear that the companies and unions need a full restructuring and to focus on the fastest way to build / market/sell alternative energy cars and that’s to bring back the EV program by mandate if they won’t do it on their own.
Mark my words… This bailout will not do anything other than buy the automakers time to come up with another proposal for aid in ten years . Don’t do it!!!
Absolutely no bailout of any kind. The Big 3 are the epitome of leaderless, mindless, trend-following, obese & cost ineffective companies in the world. Even Chapter 11 is to good for them but it’s the only hope of purging the terrible union hold on manufacturing and mindset in the companies. After Chapter 11 and resignations by all senior management, then, and only then, should the taxpayer think about buying into the carcass.
They need to take advantage of the Chapter 11 bylaws, etc. Under Cap 11 they can regroup and eliminate the practices that have led to this disaster!
Then come out with the changes needed to compete in todays and tomorrow’s market!
If they need a loan after reemerging, then the Gov’t (taxpayers) could possibly grant a loan. To loan money satus quo - will not solve the problem!
I totally agree with Mike Thomas’s suggestion below…the American auto companies know exactly what kind of cars to make to attract American drivers…they just don’t want to spend the money to re-tool their ancient, sprawling factories. However, I believe this bailout –in the form of loans– should be accompanied by massive government oversight, so much that the CEOs and other executives should go to sleep in sweats every night…not unlike many other suffering Americans. The Iacocca standard should be gladly adhered to by the executives: 1$ a year in salary until their butts are out of the fire. That also means flying Southwest and eating at McDonalds. Also, FIRE THE OLD DESIGNERS. Nobody buys lumbering, inefficient Buicks anymore.