Why do the Big 3 Detroit automakers need loan guarantees from the government? According to Bob Nardelli, the CEO of Chrysler, it's a way "to enable the car companies to retool for innovation." Tom Friedman is beside himself over this and I couldn't agree more.
http://www.nytimes.com/2008/11/12/opinion/12friedman.html?_r=1&ref=opinion&oref=slogin
Why should taxpayers have to pay these companies to innovate when that was what they were supposed to be doing in the first place? Logic has evaded Detroit.
No innovation + no vision by management + overly generous labor contracts = a situation where the big 3 automakers can only make money by lobbying and manuevering to sell its out-of-date "gas guzzlers." That includes "lobbying to block Congress from raising the miles-per-gallon requirements."
While people like Bob Lutz from GM say innovations like the Toyota Prius "makes no economic sense," foreign companies like Honda are building new plants in Canada (for example) to build fuel efficient four-cylinder Civics "in response to growing North American demand for vehicles that provide excellent fuel economy."
In addition to the execs at the Detroit big three, the Representatives and Senators share blame for voting "however the Detroit automakers and unions instructed them to vote" which shielded the big three from "environmental concerns, mileage concerns, and the full impact of global competition that could have forced Detroit to adapt long ago." Who is running the asylum here anyway?
This has to stop. They didn't innovate before and they won't do it again. Another bailout or loan or whatever they want to call it will only pacify the status quo. As Paul Ingrassia said in Monday's Wall Street Journal, in return for any further government aid "the board and management" of these companies "should go and shareholders should lose their remaining equity." And someone appointed by the government should be authorized to "revamp [these companies] with a viable business plan" including "tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company."
In other words, running the business like it should have been run in the first place. A blank check is not going to deliver different results than what got us in this mess. Any loan should be done in such a way that reforms these companies to be competitive. If not, we are only delaying the inevitable.
Subscribe to:
Post Comments (Atom)
Posts
2 comments:
While I agree with the fact that Detroit and its products have become obsolete, we invented the car and Ford, GM and Chrysler are iconic brands. Their demise means the destruction of many American familes. I wish there was a perfect solution.
When they were innovative, they were great iconic, American brands. They are no longer such and they are at a crossroads. The jobs that you speak of are in danger whether or not the government gives aid to the companies. If they don't put a competitive product on the market, the jobs will continue to go away.
Post a Comment