Clout Has Plunged for Automakers and Union, Too - NYTimes.com
Detroit has not made a good case for a bailout. One of America's pillars is that we reward and glorify winners. Detoit auto companies are losing badly. There seems to be a lack of urgency. If they are serious about it, they need to cut their limos and salaries ($1/year anyone). There also needs to be a serious rehauling of the management. It seems like the bailout would be rewarding failure and we don't like to do that.
One other thing is that their argument of Wall Street's Crisis coming to Main Street is totally bogus. It's not like the Detroit automakers turned a corner recently. This has been going on for decades. Union contracts, selling profitable assets, executive perks and compensation, mediocre cars, quality isssues: have all led to the decline of the U.S. Auto industry. And how have they adjusted? Still selling cars that no one wants to buy (quality, styling, fuel economy), still have terrible contracts (although the last contract has some serious cost benefits for mangement), Executive perks and pay way out of line for the performance (Rick Wagoner's long tenure and salary at GM as it disintegrates is unexplainable).
Do we want to fix these things? How do we fix these things? Chapter 11 is the best solution. If not that then a modified "bankruptcy" where the same things happen under Chapter 11, but you don't call it that. If we do everything: Ditch management, renegotiate with the unions and creditors, get rid of brands and dealerships, there's still a good chance that at least one of the Big three will be gone. Not to say that the brands won't be around, but they will not be viable "American" companies.
This is not a bad thing. It's unsustainable to sell 16 million cars a year in the foreseeable future. It's unsustainable to have so many brands for cars that no one wants. It's unsustainable to have so many more dealerships relative to marketshare. This is going to be painful. Michigan and Ohio are going to take it on the chin and hurt for years. However, this creative destruction needs to happen. If the government wants to bailout folks, why not hand over checks to every
American. Or bailout the workers with a safety net (unemployment benefits, training, education). It is in that next new thing that we must have faith in and beleive that will make things better.
Detroit has not made a good case for a bailout. One of America's pillars is that we reward and glorify winners. Detoit auto companies are losing badly. There seems to be a lack of urgency. If they are serious about it, they need to cut their limos and salaries ($1/year anyone). There also needs to be a serious rehauling of the management. It seems like the bailout would be rewarding failure and we don't like to do that.
One other thing is that their argument of Wall Street's Crisis coming to Main Street is totally bogus. It's not like the Detroit automakers turned a corner recently. This has been going on for decades. Union contracts, selling profitable assets, executive perks and compensation, mediocre cars, quality isssues: have all led to the decline of the U.S. Auto industry. And how have they adjusted? Still selling cars that no one wants to buy (quality, styling, fuel economy), still have terrible contracts (although the last contract has some serious cost benefits for mangement), Executive perks and pay way out of line for the performance (Rick Wagoner's long tenure and salary at GM as it disintegrates is unexplainable).
Do we want to fix these things? How do we fix these things? Chapter 11 is the best solution. If not that then a modified "bankruptcy" where the same things happen under Chapter 11, but you don't call it that. If we do everything: Ditch management, renegotiate with the unions and creditors, get rid of brands and dealerships, there's still a good chance that at least one of the Big three will be gone. Not to say that the brands won't be around, but they will not be viable "American" companies.
This is not a bad thing. It's unsustainable to sell 16 million cars a year in the foreseeable future. It's unsustainable to have so many brands for cars that no one wants. It's unsustainable to have so many more dealerships relative to marketshare. This is going to be painful. Michigan and Ohio are going to take it on the chin and hurt for years. However, this creative destruction needs to happen. If the government wants to bailout folks, why not hand over checks to every
American. Or bailout the workers with a safety net (unemployment benefits, training, education). It is in that next new thing that we must have faith in and beleive that will make things better.
posted by Spud at 8:41 AM
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