Comment & Debate
“US carmakers deserve another chance”. The Business Times Singapore. 18 Nov. 2008 – A bailout – which would come with strings attached, including commitments to reform and retool – would also offer an opportunity for change. It could force US carmakers to make more fuel-efficient cars – for which they already have the technology – and to cut their costs, thereby regaining the competitiveness they have lost. They deserve another chance.
Paul Ingrassia. “Detroit Auto Makers Need More Than a Bailout”. Wall Street Journal. 10 Nov. 2008 – In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible.
That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits. The same basic rules should apply to Ford and Chrysler.
These are radical steps, and they wouldn’t avoid significant job losses. But there isn’t much alternative besides simply letting GM collapse, which isn’t politically viable. At least a government-appointed receiver would help assure car buyers that GM will be around, in some form, to honor warranties on its vehicles. It would help minimize losses to the government’s Pension Benefit Guaranty Corp.
But giving GM a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake. The company would just burn through the money and come back for more. Even more jobs would be wiped out in the end.
Greg Chaney, Manager, Chacon Autos, Dallas-based owners of eight automotive dealerships: “If there is to be a bailout, I think there should certainly be strings attached, as the status quo is not working. They must present some sort of business plan to a board created by the government prior to any money being lent. We should limit what the money could be used for. It should not be used for increased dividends, executive bonuses, stock buy-backs, and only used to acquire another company if approved by the board. I think a heavy emphasis should be put on new alternate fuel vehicles or high fuel efficiency vehicles. And they should improve the quality of their fleet of passenger cars.”[1]
“Help Detroit Big 3, but add strings”. Toledo Blade. 2 Dec. 2008 – The auto industry is clearly and inextricably entangled with the overall economy. The social costs of letting even one U.S. automaker meet a free-market fate and collapse might constitute too high a price tag.
But by the same token, saving this industry cannot be untangled from our other national policy messes – transportation, say, and national security and health care.
[…]Commence the attachment of strings! Lots of ’em. Set greener standards and faster deadlines, both of which are already long overdue. Detroit can’t do what Washington doesn’t insist upon. So now it’s time for the government – for us – to insist.
As Al Gore (whose name we hope is no longer an anti-green punch line) tells Newsweek: “I think the whole industry should be transformed.”