Audio – Why help Detroit?

September 17, 2008

tim1.jpgAs with most issues, there are two sides to this one as well. and both were heard this week at the Reuters Autos Summit in Detroit.

The U.S. government has committed to spending $25 billion to help the U.S. automakers finance needed changes in production, manufacturing and design. And if the Detroit automakers get their way, that number will end up being more like $50 billion.

The automakers say the loan guarantees are critical, while opponents have said that the money is essentially a government bailout of an industry that has made its own bed and should now sleep in it.

But in the past few days, Washington, D.C. has been a pretty busy place on the government-assistance front (Freddie Mac, Fannie Mae, AIG).

This could be good and bad for the automakers.

Clearly, the government has made some decisions on what industries are too big to fail and has shown a willingness to pony up funding. That’s a plus for the automakers.

But on the downside, the government HAS just spent several hundred billion dollars and someday, someone will have to repay that money. Will they want to spend more?

Some might still ask why the government should help Detroit.

But Tim Leuliette, chief executive of Dura Automotive Systems gave a pretty compelling discourse on why to fund the companies.

Leuliette knows a little something about finance and a little more about Detroit — he served as chairman of the Federal Reserve of Chicago’s Detroit branch.

His point was that as bad as it was to see companies like Lehman Brothers fail and AIG get into its serious trouble, a failure of a major Detroit automaker would be much worse. He spells out an interesting case.

Leuliette was one of the featured speakers at this year’s summit — whch runs through Thursday in Detroit. Up next for Reuters Summits — our first Reuters Restructuring Summit on Sept. 22-26. Considering all that has happened in the past few weeks, restructurings could be THE hot story for the rest of 2008.

8 comments

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Of course we should help the auto industry. They are the cornerstone of our economy and I am tired of all of these executives, who don’t drive american cars and haven’t for decades, stick there noses up when it comes to the American car industry. Look at all of the hard working Americans who have made the american car industry their life. What about their jobs?

Leigh, I couldn’t agree with you more! This is something I’ve come to understand the hard way; by being a part of that industry. I’ve worked all kinds of small shops of different kind and styles before I got a job at American Axle in Detroit by shear GRACE OF GOD! Let me say this first, I can’t thank Mr. Dauch enough for that job and all that my family was able to enjoy but, what did he and his family enjoy 100 fold from the blood, sweat and tears of all my fellow brothers and sisters scattered around five locations of this GREAT NATION!!
The manufacturing business industry as a whole has been the heart of this country for 120+ years. Everbody sees the astronomical salaries, bonuses and ecspecially stock options these people get that pays them close to 15 times what I made a month!! All we as a Unoin did was fight for our share. We work as hard if not harder then any executive. Let them come out on that floor and deal with what we have to for a week. Going home tired, sore, frustrated and missing out on our family.
I know there’s people that deal with that and then some with their jobs; like the miners but, when you have a union behind you, at least theres an avenue to utilize to help find some balance. A lot of peoples problem with the union is jealousy and envy. But, all could enjoy this security from harrassment, forced overtime, disrespect, unsafe conditions, ect. if everbody would stop the complaining and learn what it could do for you! Contrary to what some ads and commercials want you to believe, even with card check signing for representation you are not forced and management can’t hassel you about wanting to sign. The union is there only as a witness on YOUR behalf not theirs so, management can’t deny you the rights of that protection that that card provides! GOD BLESS ALL UNION BROTHERS AND SISTERS AND SOLIDARITY IS FOREVER WHETHER OR NOT YOU TOOK THE BUYOUT!!!

I love to help but how can I or anyoneelse for that matter:
My job is on the line
My house value is 50% less
My savings are gone
My insurance policies may be void
My state and town mayorship are broke
and my government tells me otherwise??
How can I help?

It is imperative that the Govt steps in to save the industry especially after the efforts that it has done to pull out the financial sector. These Wall Street guys have only been driving foreign cars for decades that they don’t understand the importance of the Detroit manufacturers and the importance it has for middle class America. The US needs a healthy automobile industry and this would help the economy in the long run. It is the governments last chance to bail out a very important segment of its economy despite the mistakes of the industry.

Posted by Nith.C | Report as abusive

The US Auto industry has polluted our country and undermined our self-reliance by resisting efficiency standards at every step; and now has the gall to come crying for welfare after doing everything it can to move its white and blue collar jobs overseas? NO!

Hows this GM: Suck it! Ask your new executives in your billion dollar Chinese R&D facility to pony up for this sob story!

Let these rusty, greedy cretins and their entitlement-riddled workforce go stand in line at the unemployment office like everyone else. TAX REVOLT NOW!

Posted by Noeffen Way | Report as abusive

I am against a loan/bailout for the aquto industries.
They just need to reduce the hourly pay and benefits of the current employees, and reduce or eliminate the benefits of the retirees.

Employees receive TOO MUCH compensations for their work.

Reducing pay and benefits would release money to the big three so they could invest more into R&D, pay dividends to stockholders, and have some profits.

Posted by Richard S. | Report as abusive

For one, GM isn’t doing enough to combat their own problems why the hell should we bail them out? Wagoner should have been ousted long ago. You could get rid of half of the employees there who are riding the gravy train and it would still get the same amount of work done. Unions need to be abolished, it is outdated and some of the things they whine about are outrageous, it’s like welcome to the real world. I have worked there and have seen the union at work first hand – on site ebay auctions with company property (yes on site at GM right there for all to see with company owned property for sale) among other outrageous things they get away with. Why don’t they get rid of an entirely duplicate line of autos? GM and Chevy, yeah, same damn thing, it’s a waste. It is just another old codger run American company that needs to get with the program, but no, they rather wait until the bottom completely falls out and then ask for handouts. Greed and incompetence is rewarded handsomely in this country.

screw these corporate giants. Let ‘em fall. Let the new bio-fuel operations take their place. Dinosaurs went extinct, so can these oil companies.

Posted by Mike R | Report as abusive