GM/Chrysler: Tax Dollars to Fund Layoffs?
It's a strange world. The next place the government might spend our tax dollars: funding layoffs in Detroit. The Clusterstock blog helpfully finds this gem in a recent Wall Street Journal story about merger talks between General Motors and Chrysler. Both companies are "locked out of the credit markets and burning cash rapidly," which adds considerable pressure to the merger prospect and to the potential "assist from the federal government."
That assist would help the companies reorganize, including implementing layoffs and plant closings, but would most likely head off much deeper payroll cuts. From the WSJ:
The auto makers and Michigan political delegations have proposed at least three plans in recent weeks to unlock federal cash for a merged GM-Chrysler, including seeking an equity investment from the government or unlocking funds from its Troubled Asset Relief Program, or TARP.
GM and Chrysler estimate that a combined entity would need $10 billion in new equity to lay off workers, close plants, integrate the two companies and provide liquidity, according to several people involved in the talks or briefed on them.
Keeping these two companies afloat is vital to the health of the auto industry. The WSJ reports that parts suppliers and local dealers would be left hurting, while the government's pension-guarantee program would get "swamped."
Tags: General Motors | careers | cars | Chrysler | car manufacturers | government intervention
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Reader Comments
Expensive plant closings
Crystler and GM lament the fact that they must close factories, but they save almost nothing by doing so. Idle UAW workers will receive 95% of salary and 100% of benefits to play golf, vacation, drink beer by the backyard pool, etc. But the factories will save on electricity and toilet paper during the plant closings Similarly, management will expend less private jet fuel and other needless expenses.
Unless bankruptcy forces changes to bring the "big" (small and getting smaller) three back into market reality, American consumers will rightfully drive Toyotas, Hondas, Hyndays, VWs etc. all made here in the USA while employing Americans in vibrant Southern communities.
Fund the Merger!
Unfortunately in the real world it is survival of the fittest. Chrysler isn't very fit. If GM doesn't buy Chrysler, then some foreign company will and the results will be the same anyway. I say keep Chrysler in American hands Then retool the company. Start building more fuel efficient cars that can compete. Find out what consumers want and build the best, most fuel efficient cars, trucks, minivans, SUVs, etc. Become profitable again! Remember the first rule of business is survival. If the American car industry is to survive then this merger should be approved.
Equality of Sacrifice
If the Government assists the big three, then the employees (all, salaried and hourly) must sacrifice equally. Take pay and benefits cuts immediately without a long drawn out bargaining session. Otherwise, no deal.
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