Would a $34 Billion Loan Help or Hinder Detroit?
U.S. auto industry leaders have asked Congress for a bailout in the form of $34 billion in loans. Proponents argue that it would avert a greater catastrophe for the national economy, while critics say it would prevent needed restructuring. Should the government help the "Big Three"?
- Pro: UAW Chief: Auto Bailout Is Necessary
- Con: An Auto Bailout Would Prevent Needed Reforms in Detroit
Previously: Job Market Gets Worse in November
Reader Comments
A long time coming
In 1971, as a newlywed, my husband and I bought our first new car. My Dad was a foreman at Ford and proudly offered us the family discount plan. I told him "Dad, we can't afford to buy a Ford. It isn't the cost of the car, it's the upkeep." And we got a terrific little Datsun 510 that served us loyally for years. Dad was crushed, but had no defense. It is more than 35 years later and our American car makers are 'getting it', but painfully and slowly. There still is a resistance to make what consumers want (quality and reliability) and little attention to the needs of the future where energy costs will assuredly make our gas-guzzlers obsolete; Detroit is insular in its' thinking and resists any change, despite the fact that their management style isn't working. A blanket check is unacceptable; it is throwing good money away after bad. Nothing will change unless their hand if forced. Chapter 11 may provide the safeguards. Ford is, at least, making attempts to change their modus operandi, but without union support and compromise, it is a tough road for any of the Big-3.
Auto Makers Bailout
I don’t have a problem with taxpayers bailing out the auto companies, but I think the directors, officers, and key top-line managers ought to put their money where their mouth is. Accumulatively these people have made fortunes amounting to hundreds of millions of dollars. Over the years the automakers were either losing money or on the verge of it. They should have taken steps to correct their situation then, instead of jumping on the bandwagon now.
Therefore, they all should be required to put their own assets up as collateral for the bail out. If the automakers do not become profitable, then let the manager's and director's assets become available to pay off the loans before the taxpayers do. Even the Unions can provide their share of collateral through pension funds, etc. if they are unwilling to reduce wages to help the process.
If any of these corporate leaders are not willing to collateralize their assets, then they should be replaced by those who are. Now, this could put much of the country behind the bail out proposal.
Some industry truths
Tom price's argument is based on talking points that are not true. Do the research, the Fusion Hybrid has just recieved certification for a 41 mpg rating placing it 8 miles over the Camry hybrid. The Escape hybrid is already top in SUV's. The new F-150 is #1 in fuel efeciency among full size trucks. The Ford Fiesta is getting over40mpg and is the hottest selling car in Europe and Asia and is coming to America within the year. These companies have streamlined, globalized and spent billions on fuel-efficiency r+d. Your about to see more hybrids,plug-ins,and clean deisel vehicles coming out of Ford than any other company.Why do you think Toyota has asked for 40billion euro for future r+d. Add this to Toyota's record breaking recalls and quality issues from engines gumming,to suspensions falling out, to 775,000 tacoma's being crushed due to rusted frames and you will see why these Southern Senator's are trying to protect the billions they have invested in their foreign transplant pertners.By 2015 Ford will have the top fuel effecient vehicle in every segment. The media and these political leaders need to due their research,it's not 1999 or even 2005,the game has changed.Is it important for the American public to know what they are being asked to invest in and the truth is not being told. It is time for some responsible journalism. Take an objective look inside the companies,report what America needs to know,instead decade old myths and sensationalism.There is still work to be done but these companies are on the right path,Ford is already there. With an extensive stimulus package on the table to help our economy I believe an investment in these companies will be paid back many times over. It is not a bailout, it's a loan and it could be the best investment this country has made in a long time.Chapter11 is an opton and may be the best thing for GM,however this will cost the American taxpayer while a loan will be a good investment with the right oversight.
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