Comment & Debate
Daniel Gross. “In Defense of Detroit”. Newsweek. 13 Nov. 2008 – There’s a general consensus that in order to survive as going concerns, the Big Three need to shrink their capacity by 40 percent, recruit new managers and corporate boards, restructure labor relations in such a way that they can have lower-cost and more flexible workforces, and shuck many of the liabilities they willingly entered into, all while raising vast new sums of capital to invest in research, development, and factory modernization.
But is a Chapter 11 filing the best way to reach these goals? Answering yes presumes that the case would be resolved quickly, that the entities would be able to obtain ample debtor-in-possession financing, that parties with legitimate legal claims on the company’s assets and cash flows would give them up willingly. But many of the questions surrounding the Big Three’s future can’t be resolved in law firm conference rooms or in the chambers of bankruptcy court, and won’t center around legal questions. The failure of the American automotive industry – and let’s be honest, it has basically failed – is a matter of public policy. If the Big Three can be saved, they can only be saved by government.