I have to admit that I wasn’t following the republican presidential race that closely so I have yet to form a solid opinion of Mitt Romney, but his recent NY TImes op-ed piece “Let Detroit Go Bankrupt” makes me think there’s some sound reasoning behind him.
My opinion: Detroit would be in the dumps whether or not the economy was in recession. WIthout the bailout they will be forced to make the difficult decisions that should have been made 20 years ago!
Points that hit home with me:
"Second, management as is must go. New faces should be recruited from unrelated industries â€” from companies widely respected for excellence in marketing, innovation, creativity and labor relations. "
“Investments must be made for the future. No more focus on quarterly earnings or the kind of short-term stock appreciation that means quick riches for executives with options. Manage with an eye on cash flow, balance sheets and long-term appreciation. Invest in truly competitive products and innovative technologies â€” especially fuel-saving designs â€” that may not arrive for years. Starving research and development is like eating the seed corn.”
Absolutely! If they were focused on designing and producing viable products they wouldn’t be in the current situation . It is not like the problems that they face today were hard to foresee years ago. I think they were just focused on short term profits a few years ago when they should have been thinking ahead.
1st “if you don’t remember”… They just got a bailout!!!..
“The U.S. House on Wednesday (September 24, 2008) approved $25 billion in loans for the troubled U.S. auto industry, as Michigan lawmakers hailed the plan as key toward saving thousands of jobs in the state and vowed to press for an additional $25 billion next year to boost the industry’s retooling.” (business week)
2nd “if you don’t remember”… They dug their own grave by dropping out of the PNGV partnership with the us government. The big three had federal funding to come out with the first hybrid but, they dropped out. Toyota and Honda new of the PNGV and started their R&D on hybrids in 93…
“Formed in 1993 by the Clinton and Gore administration “Partnership for a New Generation of Vehicles” (PNGV) that was supposed to produce an 80 mpg family car.roundbreaking partnership between the Federal government and the U.S. Council for Automotive Research whose members include DaimlerChrysler, Ford, and General Motors (GM), to plan and manage research and development activities for a wide range of leading-edge technologies that have the potential to dramatically improve the fuel economy of, while also reducing the emissions from, cars and other light duty vehicles, including vans, SUVs and pick-up trucks.”
Should we (taxpayers) really give billions of more dollars to such a badly run business?
Again (this came up in the GM thread too), if detroit had done all of these wonderfully intelligent things, they wouldn’t be in their current situation. Right! Yay. Except that’s not what they did. Moot point.
The bailout is there because of fear over the cascade of problems that arise if the big 3 tank, especially GM. They’d pull dozens of suppliers down with them, which are employed by numerous auto companies, which hurts the entire industry and costs even more jobs. They’re major customers for the IT industry, and a major driving force in materials and technology development.
So its a question of cutting our losses–are we better off letting Detroit go under and seeing what happens when the dust settles, or is it in our best interest to attempt to save them?
Maybe I’m biased as an american, tho–this isn’t exactly a happy time in our economy for major employers to start disappearing.
i think that people are too scared about losing all those jobs and that congress will take the path of least resistance.
I agree. congress WILL (right or wrong) take the path of least resistance.
The BIG problem is… “Those Who Forget History Are Doomed to Repeat It”.
If $25,000,000,000.00 2 months ago couldn’t make a difference, how can another $25,000,000,000.00?
If (when) they take this money and can’t get a higher percentage of market share in the U.S. New vehicle market ($382 billion, 16.7 million cars in 2003) Then we are throwing our money away on a bad investment.
It’s important to remember that “bankruptcy” does not mean “liquidation.” The fear mongering we are being fed about 10 million jobs being lost is absurd. GM needs to go through chapter 11 to free itself of these legacy costs. They will not be closed down in the process- the company has too much intrinsic value. The only potential problem is that the current credit market may make it difficult to secure financing through bankruptcy, but that is an appropriate role for the government to take given the circumstances.
I have to believe, however, that the democrats owe too much to the unions to allow GM to do what needs to be done. Instead we are going to end up with a car industry that’s run as a WPA-style makework jobs program.
let them fail, let the suppliers fail. allow the unemployement to happen. retool/retask the work force. there is a ton of work that needs to be done in this country anyways.
the greatest rebuilding of america came by putting millions of unemployed to work on civil works projects. stop bailing out stupidly run banks and manufacturers and put back into country through revamped infrastructure.
i face the fact that if i lose my job, i’m probably not going to find one for a long time, so i’ll have to do something in my skillset or learn new ones. yeah it sucks, it’s tough, but nothing ever comes easy. i’m sick of the sense of entitlement and eveyone wants something for nothing.
it’s really the precipice of a new evolution. people are so scared to change that they can’t see the opportunities. people want change. the election proved it. it’s a helluva way to start a new, historical path to tearing down all that is busted.
The fear mongering we are being fed about 10 million jobs being lost is absurd.
NPR did an investigation on the 10 million job’s. it IS absurd! it included Car wash employes, gas station employees, small businesses that fix cars etc… It sounded like if the ‘big 3’ wend under, everyone would stop driving their cars.
Good flick, but as usual there’s “your side, my side, and then the truth”
I don’t know about the truth portion of that, but the flip side that isn’t mentioned in the movie is that GM lobbied to produce a hybrid instead of an EV, because they felt it would have more mass market appeal and more long-term staying power (at the time). California (I forget which environmental/energy board GM was working with) shot that down and insisted that they do a full EV if they wanted cooperation. Well guess what didn’t turn a profit, and guess what businesses do to projects that aren’t turning a profit.
@Cyberdemon: I completely agree. These pompous idiots are the reason we’re even having this conversation. Let’s see if we can get Iacocca out of retirement…
Ford CEO Mulally’s corporate jet is a perk included for both he and his wife as part of his employment contract along with a $28 million salary last year. Mulally actually lives in Seattle, not Detroit. The company jet takes him home and back on weekends.
What!!! Geez these guys just don’t get it. They’ve gotten so fat and lazy it’s disgusting.
Lee Iacocca lowered his salary to $1/year back when he was CEO of a floundering chrysler. He retired rich because of his stock in the company–which rose by something like 800% while he was in charge.
As far as I’m concerned, this is how CEOs should be paid. You do well if your company does well. That’d prevent idiots like Eaton from raping and pillaging their own companies because they know they have a nice fat severance pay secured at the end of it all.
Only if they’re allowed to cut an run whenever their stocks twitch.
I seriously hope that wasn’t the mentality of Detroit’s last few bigshots, because that means they’ve not only failed their companies, but ALSO their evil schemes involving short-term stock bumps. That’d just be embarrassing.