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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This is a very simple case. The three automakers will never be competative with the noose of the UAW and its outlandish contracts around its necks. The only way this makes sense is to allow each company to reorganize under bankruptcy protection, disband the union, drastically reduce its pension and healthcare liability to all of its retired workers and then, get financial aid from the American Taxpayer. With a clean slate and cash on hand, the US Automakers have a chance to survive and thrive. Otherwise we are postponing the inevitable. We all know the US Government will take the easy path and just give them the money even though any sane individual knows bankruptcy is the right course of action.
U.S. Automakers and UAW must take heed from the foreign Automakers that are manufacturing cars and trucks in the good old U.S.A. and apparently making money. I have not heard of any of them asking for a rescue loan. It is common knowledge: American autos are as good as any automobile manufactured in the world. The Big Three were strong in the SUV and truck market because there was good strong demand and limited completion from foreign companies. However, providing small economical cars with a good safety rating in this current environment seems impossible. Let us face it; with “the Cost of Sales” generated by both labor and management and competition of the foreign companies makes profit margins very small. In the case of the Big Three, they are non-existent. As we know, at this time large SUVs and pickups are very hard to sell. What can be done?
The U.S. Automakers need a large loan from their Uncle Sam, and they need the loan right now! However, before that can happen, they must provide a plan of action. For both the Big Three and the UAW to show good faith and reality adjustment, they must cut wages, benefits or both for labor and management to show America and the Congress they are intent on long-term survivability. Some people say, “Let them go under”. Some say, “The UAW is bad and we do not need unions anymore.” Without the standard of living that unions have afforded America and working conditions they have improved through legislation, America would be unfriendly and unfair to the worker. Fact remains that unions as well as manufactures must change with the times or goes the way of the dinosaur. If the Big Three go under, we could see a loss of as many as 14 million jobs* in this country. It is my understanding that without that 25 billion dollar loan the Big Three will go into bankruptcy. I think I can safely say that being the highest paid unemployed manufacturing workers and managers in the world without a job is not as preferable as being a worker, manager or CEO with a somewhat diminished but livable income. I think that it is time the Big Three to step up for America and themselves. I think Americans would appreciate a similar sacrifice by all the upper management of the many financial institutions that have received rescue payments from the U.S. Government. I believe it is said, “Self sacrifice is good for the soul” and it is also good for our economy right now.
I know that giving part of ones’ earnings back to stay in business and remain employed is a good strategy because, in 1980 I was a union electrician whose market share was suddenly being reduced through a large influx of non-union electrical contractors going after industrial construction projects which were the union contractors forte. We took a 40% wage reduction in wages and benefits to stay competitive. Believe me, it was a difficult period, but our union and our jobs survived and we eventually regained our market share by keeping track of what the competition was providing and proving our value. It’s time for the U.S. Automakers to do the same thing.
*Rampell C. Economix: How Many Jobs Depend on the Big Three? nytimes.com November 17, 2008, accessed: 12/01/2008.
I believe we should help GM and Chrystler, but only with a restructured plan with all of the Executive perks taken out, and a plan to manufacture and sell electric and solar vehicles. As for Ford, they have another plant already in Europe putting out a car this year that gets 60 miles to the gallon of diesel. Why doesn’t Europe bail them out? And why doesn’t our country allow us to have clean burning diesel vehicles? Ford has said that they won’t be selling any of these vehicles in this country because our government will not allow them. I understand that they burn cleaner than the traditional gas burning vehicle, so what is the problem? I think we should let the government know we want these cars in our country. We should bail out Ford, although I believe that Europe should help bail them out. Europe is getting the most benefit from Ford’s staying in business.
I also agree with prior comments, we need to look at the big picture. We spend more money rebuilding Iraq, Afganistan and other Middle Eastern countries than we spend on rebuilding ours. Who ever said that when we go in and blow something up, we have to then rebuild what we destroy. No other country does this. The Middle Eastern countries have plenty of surplus money from the recent rise of cost in oil to rebuild their on countries. Didn’t the Americans go to their countries to help them? We have already spent enough money in their countries by supplying the military support they needed. Why do we then have to spend more money on rebuilding their country, when our own is in desparate need of repair. We need to bring the military home and rebuild our own country. If you have not seen the I.O.U.S.A. video you should. I went to the Countrywide broadcast at the Theatre. The basic point of the whole thing is that we need to buy American!!!! For this country to survive, we need to buy American!!! I’m not saying that Walmart is at fault. It is our fault for sending our manufacturing out of this country. And it is not all China. When I went to buy envelopes yesterday, they were made in Mexico. It is getting harder to find items Made in the USA. I believe that the government needs to invest in new start-up companies that will begin to manufacture more American made products in this country. At the same time they also need to help the manufacturing companies that still remain here to keep their businesses going. Although, that all depends on you, the consumer, to Buy American!!!
Why is it that the Sentate and Congress do not see the big picture. If this country let the big 3 go under it will cause the biggest ripple effect that they have ever seen.
This country cannot afford to lose more jobs, more tax revenue, more depression. If you want to help the economy wake up and see the big picture.
Does anyone up there have any common sense???????????????
THIS IS NOT A BAILOUT FOR THE AUTO MAKER’S IT IS A LOAN. IT WAS A BAILOUT FOR THE BANK’S AND AIG. I GUESS THAT’S BECAUSE WHEN IT COME’S TO BANK’S AND INSURANCE COMPANIES IT IS HITTING THE POLITICIANS POCKET’S, THAN THEY GIVE MONEY NO QUESTION’S ASKED AND BY THE WAY DOES AIG, CITI BANK AND THE REST OF THE BAILOUT FOLK’S FLY IN PRIVATE AIRCRAFT? GEE NOBODY ASKED THAT QUESTION.
AND I BET MOST OF THESE POLITICIAN’S DRIVE FOREIGN CAR’S TOO. THE AUTO INDUSTRY IS PRETTY MUCH THE LAST IN THE UNITED STATE’S TO PAY A DECENT WAGE AND OFFER A DECENT BENEFIT-AND THE GOVERNMENT WANT’S TO TAKE THAT AWAY, I GUESS BECAUSE THEY WOULD LIKE US TO BE THE SAME AS MEXICO YOU ARE EITHER RICH OR YOU ARE POOR NO MIDDLE-AND YOU CAN STAY POOR BECAUSE THAT’S THE WAY THE GOVERNMENT WANT’S IT.
No bailout or loan. Let the companies fail and the profitable parts be bought and run by other companies with the non-profitable parts be discontinued.
Why aren’t the foreign car companies among this group of CEO’s asking for help when they also build cars in the US and employ US citizens?
Here’s another reason why not: I will be buying a new car within the next 3 months and no American car company is on my short list.
Why? Quality, reliability and resale value.
Please note that I didn’t mention price.
Also, I don’t think I have ever heard anyone dumber than Westley Clark. The technology developed by these companies was not developed for the military. My duce and 1/2 did not have keyless entry, tinted windows, three position 10 way electric seats, a computer made in china with hatasahi chips, a bose stereo, plastic wood and chrome. The developments in Detroit have not been in the areas of reliability or usefullness, the developments have been in fluff. I might add that we recently spent a few billion with GM to develop a better armored vehicle and the entire program was overcome by the terrorists with a couple extra pounds of high explosive. Just another example of fixing the wrong thing and throwing good money, MY MONEY AND YOURS, after bad. Finally, I live in Los Angeles and wonder why we even need more cars there are sure a lot on the docks that can’t be sold now. This is not an “if you build it, we will buy” problem, this is a “you lost out to the competition problem” and now that times are hard people will buy only the good stuff or fix what they have. Lots of automakers have gone under over the years. What’s a couple more. Let those who are left fight it out among themselves by building things that don’t break, things that don’t cost much to run, and things that cost less than the competition. This is a situation where less is more.
No bail out. No loan. No nothing. Companies should not be rewarded for failure. These executives don’t seem to be giving back the money they took over the last 20 years when business was great. They should have taken less and saved more so they could weather the downturn. If congress bails them out with MY money, it will signal to everyone that when times are good you can take advantage of your employees and customers and when times are bad you can take advantage of everyone else. I may think differently if GM gives me a full refund for my 1979 cutlass diesel (my last ever American car and a real piece of junk), but I doubt it. I’ll vote out anyone I can who approves the automakers requests under any condition other than the complete bankruptcy of the companies and the personal bankruptcy of the executives.
Forgot to add something… If I were a an “outsider CEO” and I was being recruited by an automaker forced by the US Gov’t. to hire an outsider, what idiot would take that job for $1 a year?
You want results from a CEO, you have to pay him what he’s worth. Ford and Chrysler have done just that. And Ford’s seems to be doing all the right things.
Wow. Where do I begin? First off, the idiots in congress required NOTHING of the banks to receive bailout money. No oversight to speak of, no one answering to anyone. Just give ‘em the cash.
Next, they stated that maybe the CEO’s should all be thrown out and replaced with “outsiders” and also take pay cuts. The problem with this? Chrysler’s and Ford’s CEO’s are already outsiders, Chrysler’s from Home Depot, and Ford’s from Boeing. Ford has been dealing with impending collapse since 2002 or so , and had already done the necessary legwork for their recovery. Chrysler was on the way until those same bakns pulled the rug out from under them.
This leaves GM and Rick Wagoner. This guy needs to go.
As for the EV1, I was a service manager for a large Saturn dealer from 1996 to 2002. Saturn was given the job of servicing and maintaining the EV1’s. I got a chance to drive one in Spring Hill at Saturn’s HQ. It was impressive for its time, but nothing truly cutting edge beyond the high pressure tires and inductive charging system. Lead acid batteries in a lightweight body. Technology easily done today. Why was it killed? Pretty simple actually. All of these were leased vehicles, meaning GM maintained ownership at all times. They were meant as research vehicles to gauge public reaction and also to get real world data as to how real people would operate them. Nothing more.
So why wouldn’t they sell them? Government regulations require an automaker to maintain sufficient spare parts for years after the production stopped. These parts would have been very expensive as all of these cars were heavily subsidized by grants. To repair one would be extremely expensive in the case of a failure. They were basically hand built . I once heard a story about a prototype Ford Escort sustaining damage by a tree falling on it in a storm, doing millions in damage. That $1.9 million for those 80 cars wouldn’t have come close to covering the actual cost of those cars .
The second reason? Liability and unforseen lawsuits arising from what is essentially unproven technology. Why open yourself up to unnecessary litigation?
As for the “super” battery technology, that’s total BS. If it were true, they could have licensed that technology to laptop makers, cellphone makers, etc… the possibilities would have been endless. That just makes no economic sense.
Besides, the new Volt will be an infinitely better and far more practical car.
no. period. let the oil companies with the record profits based on any excuse they can give to raise the price bail out the soft bellied fat jawed cigar chomping idiots that knew this was coming. Maybe the unions will now understand that they can live on less money.
I say the auto industry wants a bailout? Maybe they shoudl get it from the oil companies they’ve been in bed with for decades who are STILL posting record profits. I don’t want them to have a single red cent from the government coffers. It is lunacy to think that bailing out companies who have proven themselves time and again to be uncompetative in the marketplace. Let the fail and let true capitalism work for a change.
If the workers really believe that they are viable and have a future then use their pensions to support the companies first. Rob
the auto executives are morons to put it simply. they have let the strongest industry in this country go into the crapper because of ignorance of the changing market and refusal to go head-on against the UAW. Its absurd what UAW employees make and the demise of the US automakers should NOT be bailed out by taxpayer $. We have been paying exorbidant prices for US cars and now we have to fork over more $ to bail their dumb asses out of financial collapse? Are we crazy.
First order of business - FIRE EVERYONE IN CURRENT MANAGEMENT OF GM & FORD they are all incompetent, greed driven idiots.
The auto industry suffers from excess capacity, too many automakers competing for a limited pool of buyers means less factories and less jobs somewhere.
Planned Obsolescence, building cars that are hard to repair and have a limited life-span has been a strategy for US manufacturers to be able to build and sell more cars. Ultimately this is wasteful of labor and materials and inefficient. Cars should be designed to be more easily repaired and built to last longer.
The principle of interchangeable parts was promoted by Eli Whitney and made possible the industrial revolution and moderm manufacturing. The US Auto industry has virtually turned this principle upside down and designs and manufactures virtually all new parts for every one of too many similar models. I can evision the remote possiblity of cars & trucks being designed with “standardized” parts somewhat like the working so of computers are standardized and somewhat like “Big Rig” trucks are standardized. Such standards might be applied to (agreed on by) auto manufacturers that grow so large, they have the economic impact of small nations with smalled manufacturers left to innovate. With standards in place, large manufacturers could compete beased on efficiency, quality of product and ultimately price.
If cars are manufactured to be repaired and to last, jobs lost in manufacturing will likely be more than made up in repairing.
My first car was a 1937 Chevrolet. It weighed about the same as a new Monte Carlo and got fairly good gas milage.
If “bolt on” improvements” as fuel injection were available, I would be happy to drive that car today.
Saving the industry as it is configured is almoste certainly a waste of taxpayer money, unless some of other non- Manufacturers are going to go belly up.
JUST SAY NO to those arrogant hot heads. They think that they can blackmail the American taxpayer. Particularly those GM bosses, they think they are gods above the universe. It will be a crying shame on the U.S. government if they hand over huge billions as extra Christmas stuffings for the likes of Waggoner at GM. Let them crash and burn. Maybe, just maybe, then they will listen to us consumers. Wake up America !! If we succumb to this extortion, then what next? These bosses need to learn that they too can live on less than $50 million/year. What if they set an example by reducing their pay by 10%? Is it possible that one could live a decent life on $20M - $30M/year, even for just a couple of years? I know it’s a sacrifice, but they wouldn’t starve, most of us make less.
Congress: SEND THE DUDS BACK HOME TO DETROIT.
Yes it is quite apparent that Europe and Asia have done a much better job of nuturing their industries through their protectionist policies while the elitist have sold the avaerage American citizen a bill of goods with these so called free markets theories that don’t exist in reality of the true markets. Wake up people!
Nature has a well established mechanism for dealing with systems that fail to adapt to their ever-changing environment. It may not be pretty, but it is effective, and has enabled our ancestors to obtain for us a position at the top of the food-chain. Yes, there have been times when altruism and co-operation have been more effective at promoting our species than pure competition for scarce resources. But, the fact that we are here today speaks to the wisdom of those who were able to discern when making sacrifices for the greater good was in our best interest, and when it was time to abandon the irredeemable.
It is now time to adapt to the new environment.
I would also like to ask a question for those opposed to giving the domestic auto industry a loan to get them through these problems much of what has been brought about by our own government policies. Where is your outrage at the tens of billions we are spending rebuilding Iraq all while the Iraq government has a $70 plus billion oil revenue surplus? I might add that the tens of billions of U.S. tax payers dollars are going to Bush and Cheney’s cronies companies with contracts that have no over sight on the cost. You complain about giving loans that would help American workers and tax payers but where is your out rage on being fleeced by Bush and Cheney in Iraq. Something is not right with this picture. Just keep drinking the kool aid fool.
This de-industrialing of America is all part of plan of the Bilderberg group to destroy the middle class of America. Nixon didn’t agree with this and paid the price for going against them. Do yourself a favor and pick up a copy of “The Bilderberg Group” book and you will get a better understanding of what and why things are happening the way they are. The loss of our steel industry, textile, and now the auto, and housing industry are part of their plan to destabilize our country so we will fall into line with their master plan of a one world government. You might not believe in this but it is happening right before your eyes and all one need to do is open them and look at what is going on around you.
They want you to believe that it is the unions or this or that are the cause of the problems. The elimination of organized groups would only make their agenda that much easier to accomplish. They have sold you a bill of goods that there is a free market. There is no such thing. I find it amazing how many people just buy into this globalization crap and accept it to their own demise.
The aircraft industry will be one of the next to go. China has already targeted several hundred billion dollars to dominate this industry with all those dollars you sent them the way of Wal mart. They have forced Boeing to share their technology with them in order to do business there along with many other industries that we used to dominate. You can kiss the good ole US of A gone as the great country it once was. What kind of future do your children have. Pretty bleak at best. Just keep buying those imports and playing musical chairs with your future.