Would a $34 Billion Loan Help or Hinder Detroit?

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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.

Karen Sprague of CA 12:32PM January 16, 2009

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.

Jim Way of FL 10:46AM December 29, 2008

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.

Jim Jackson of WV 11:17PM December 27, 2008

It is obvious from your article that Ron Gettelfinger's only interest is maintaining the ridiculously high wages and benefits of the auto workers so that he can continue to draw an exorbitant salary with all of its "side benefits" that are kept behind closed doors.
I agree with Tom Price; Chapter 11 bankruptcy exists for a good and reasonable purpose; to allow a company the opportunity to restructure its operations while protecting it from creditors and debt obligations. The end result is a better, more efficient business that can compete with foreign auto makers. Yes, it should result in re-negotiated labor contracts to help reduce costs, and management needs to start looking internally for ways to cut costs before asking the American taxpayers for a hand-out. What the American taxpayer has been asked to afford is already beyond reality and our country is too far in debt, with no relief in sight.
To-date the U.S. Auto Industry has done nothing to compete with other car makers. They have continued to produce "gas guzzlers", making us more dependent upon foreign oil. Over 50 years ago research showed the hydrogen cell to be viable for powering internal combustion engines; research that would have freed us from dependence upon foreigh oil and provided clean emissions for all U.S. produced automobiles. However, that research was shut down by powerful oil and auto industry lobbies.
If the U.S. Auto Industry continues to ignore such research and does no more to improve the efficiency (and emissions) of the internal combustion engines, they need to experience bankruptcy. Other companies have successfully made it through Chapter 11 bankruptcy and have come out better as a result.

of 1:38PM December 22, 2008

The auto industry in the south is union free but do they pay fair wages and good benefit? NO! Livable wages, perhaps, but the taxpayer provides health benefits, thanks to the politicans who cuddle the foreign investors. I live in the south and find it to be a Republican haven for those who favor the rich and the corporations. Any industry in the Old South pays low wages and no benefits, no pensions, that's why Southerners keep coming North or East. The Southern politician, Democrat or Republican, are happy to be on the take with the foreign investors. Their focus is on how to keep the foreign investors happy and keep the money coming in to their campaigns. It does not even occur to them if they are doing right by their constituents since the only constituent to them are the corporations, foreign or domestic. So, they may stand there all holier than thou and criticize the Detroit auto industry while covering up for the southern auto makers. Republicans had no trouble bailingout Wall Street even while the CEOs and other executives were spending hundreds of thousands on spas, dinners and millions in bonuses. They have no problem covering up for the Robber Barons who rake in billions while Main Street America goes down the drain---as long as they continue to receive generous contributions for their campaigns. Sorry, folks at this point in time, I don't believe anything any politician has to say--not while our nation continues to go down the drain. We are seeing two million jobs lost, families losing thier homes, 50 millions families without health insurance, more unemployed since the depression---all while Wall Street Robber Barons give themselves billions in bonuses. What have the Republicans or Democrats done about that? They try to distract us with stupid asinine excuses on why we should let an American industry go down the drain while helping foreign investors make money.
Take a good look at the South, see who is making money and who are the ones struggling?? You will find your answer there.

Luann W. of GA 2:42PM December 20, 2008

The UAW is part of the problem, not the solution. Management was stupid to sign off on improvident contracts in an attempt to appease the union which would threaten to strike if they did not get what they wanted. But, the main problem emanates from the union itself.
It is funny, I think, to non-unionized workers to see how union workers view the world. They have to be about the most selfish people on the planet. They are entirely incapable of thinking about any group beyond themselves. They use outdated and completely irrelevent platitudes of 100 years ago - oppressive management that wants them to work 20 hour days, and infants too!, in dangerous plants, for no compensation. This is all absolutely, profoundly, and more importantly, obviously, untrue. That people can keep a straight face when they hear this crap is a miracle.
Also, the UAW members are rich. Recall, according to Democrats earning 50 grand per year means you be rich. These people make twice that much! The conversation should be framed in terms like "how do we reduce the compensation of rich autoworkers? -- Didn't Marx have ideas about people who make too much $?" Their own drivel should be used direclty against them.
The anti free trade bent of autoworkers is hilarious too. It reveals that they do not give a flying #^%#$^ about workers of the world - their brothers, according to their poppycock. Free trade means workers in developing countries where unions are needed and useful can compete and get jobs. Without free trade the poor workers of truly poor countries would suffer. What the UAW wants is to impose trade obstacles to keep their high paying jobs at the expense of workers of the world who don't have enough to eat. Stop the crap UAW -- it is embarrassing.
I may be for trade obstacles, but at least I would acknowledge that I do so because I want to keep people in my country employed in good high-paying jobs and the rest of the world can go hang itself. The UAW should be as honest in their aims -- keep us earning upper middle class wages and the rest of the workers can go to hell.
Unions are a moribund institution in North America as they should be. There should be a concerted and sustained effort and expediting their complete disappearance from the scene. Even unionized workers know it is a racket. They have everything a worker could possibly require -- a high paying job they would absolutely not be able to get on merit (as the rest of us have to try and do) and for jobs that any moron could do. Robots are probably the answer.

Paul 1:40PM December 17, 2008

Bailout Czar or Bankruptcy Judge.
Who has any kind of authority? Ok Judge Ok Judge did i just say it twice?
Let them go into the same type of Bankruptcy that I have to consider as a small business owner in America.
Ok I said it Small Business in America. Who is going to bail me out or the 53 employees that I employ.
Bankruptcy is not the only option! But it may be the best.
Come on America open your eyes the last 8 years have been bad. But the future looks bright give us a chance. Dont throw good money after bad. Everyone ought to play from the the same bag of options. NO BAILOUTS

Mark of CA 3:10AM December 17, 2008

We can exchange doomsday scenarios all day long in debating the extent that our economy shall implode if one or all of the 3 auto manufacturers is allowed to slip into Chart 11.
If the auto industry failed to develop a better business model for the last 30 years, who, in their right mind, could conceive of them doing so within the next 30 days?
The unions have declared that there is no intention of scaling back their contracts until the ones currently in place expire. By then it will be too late.
The only concept of “give and take” that I see here is that we give while they take.
I’d much prefer billions being spent in other worthwhile pursuits than being squandered on the moribund and the misguided.

John Salomone of NJ 11:53AM December 16, 2008

Bankruptcy will be the end of the Big Three auto makers and all those who work for them as well as the suppliers and dealers. Who would buy a car from a bankrupt manufacturer? Comparisons with the Delta bankruptcy just don't hold water. An airplane flight is a short term experience-2 to 4 hours. An auto purchase is a long term commitment. There is not to much risk with traveling for few hours costing a few hundred dollars. There is a huge risk making a three to eight year investment in a new car costing thousands of dollars. Will parts be available, who will honor the warranty and will the car have any value left when you want to sell or trade it? No sales, no car companies. If you want to punish the automakers for what some believe are past mistakes, bankruptcy is the way to do it. Do the bankruptcy advocates know or care about what will happen to the 5000 plus workers in our small town who make parts, service and sell cars? Let's give this industry and its workers a chance to succeed. Give them the money with restrictions and the confidence that a world class auto industry can be reborn.

Dave Altena of MI 10:39PM December 15, 2008

I keep thinking of the junk Detroit built in the 70s, The arrogance they showed towards Toyota when they unveiled there Prius concept car, Now Detroit wants our tax money to fix things up, It's to little to late. Chevrolet anyway has killed there base buyers in the United States. Don't throw money at a dieing industry hopping to revive it. Don't believe Detroit or the Democrats that the sky will fall, Don't think the unions care about the companies or you, because they don't.

Thomas Clark of MO 10:34PM December 15, 2008