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http://foxforum.blogs.foxnews.com/2008/11/17/lpeek_1117/
There is only one reason to bail out the big three auto makers: fear. The economy is in such a rapid decline that the government is terrified that one more big shock will push it into free-fall. The bankruptcy of General Motors might provide the catalyst for…what, exactly? More layoffs? Fewer SUVs to sit unsold on lots?
Businesses across America can function without Chevrolets rolling off assembly lines; they cannot function without credit.
One argument for rescuing Detroit is that the government has fallen all over itself to help financial institutions, and it should be just as eager to help the car makers. There is no parallel. The urgency of preventing the collapse of large financial institutions has nothing to do with padding the pockets of financiers (the current popular rant) and everything to do with the globalization of financial markets and with the stifling of credit flowing within the economy.
AP
When Lehman Brothers went under, interrelated losses seeped into and destabilized every market around the globe. Businesses across America can function without Chevrolets rolling off assembly lines; they cannot function without credit.
We have in this country systems and protections in place that allow companies and indeed industries to fail, to reorganize, and to resume operations. Industries that suffer chronic overcapacity and incapacitating labor costs, like the airlines, are able to seek the protection of the courts as they merge, downsize and reemerge with newly competitive cost structures. This is what must happen with the autos.
Toyota makes automobiles profitably in the U.S. That is all we need to know. If the U.S. lacked the ingredients –had no raw materials, or machining capabilities, or no trained workers – then we could argue, if we deemed car making essential to our well being, that General Motors indeed needs to be subsidized. But we do have all those things –- we simply have crippling labor agreements that go back decades and that have turned our auto industry into a mini welfare state.
Some argue that we need to bail out the Big Three for national security reasons. That is bunk. Our defense industry is in great shape, and does not rely on Detroit. We’re not about to send Ford Expeditions to Afghanistan, as far as I know.
The truth is that our auto companies are not well managed.
They cannot respond to changes in oil prices and consumer tastes quickly because they are not set up to be nimble and flexible. For decades they allowed foreign companies to nibble away at their market share by making more reliable, better designed cars. Detroit has had plenty of opportunities in periods when the dollar weakened to fight for market share. Instead, they were content to raise prices and profits.
That’s because auto company managements suffer from the same short-term thinking that plagues the leadership of many other U.S. companies. The attraction of milking the last buck from making high-margin SUVs overpowered the near-certainty of a rise in oil prices and ultimate collapse in demand for their number one product. A longer view is especially important when you are unable to turn production lines on a dime; while foreign companies appear able to look ahead, ours are focused on the next quarter.
No one wants to see American workers lose their jobs. But it is an absolute certainty that if the government steps in to subsidize the auto companies, workers (and taxpayers) will ultimately pay the price. Eventually, unless the industry restructures in a meaningful way, our auto companies will disappear.
What must happen is a serious reworking of the industry’s labor agreements, restructuring of its financial obligations and new management that is charged with making these companies sharper, more nimble and more competitive. New executives should be handed incentives aplenty, based on five-year performance targets, to get the job done. Displaced workers need help with retraining, and with relocating, if necessary. It won’t be easy, but it is inevitable.
We want a U.S. automobile industry –- but one that can stand, and compete, on its own.
There is only one reason to bail out the big three auto makers: fear. The economy is in such a rapid decline that the government is terrified that one more big shock will push it into free-fall. The bankruptcy of General Motors might provide the catalyst for…what, exactly? More layoffs? Fewer SUVs to sit unsold on lots?
Businesses across America can function without Chevrolets rolling off assembly lines; they cannot function without credit.
One argument for rescuing Detroit is that the government has fallen all over itself to help financial institutions, and it should be just as eager to help the car makers. There is no parallel. The urgency of preventing the collapse of large financial institutions has nothing to do with padding the pockets of financiers (the current popular rant) and everything to do with the globalization of financial markets and with the stifling of credit flowing within the economy.
AP
When Lehman Brothers went under, interrelated losses seeped into and destabilized every market around the globe. Businesses across America can function without Chevrolets rolling off assembly lines; they cannot function without credit.
We have in this country systems and protections in place that allow companies and indeed industries to fail, to reorganize, and to resume operations. Industries that suffer chronic overcapacity and incapacitating labor costs, like the airlines, are able to seek the protection of the courts as they merge, downsize and reemerge with newly competitive cost structures. This is what must happen with the autos.
Toyota makes automobiles profitably in the U.S. That is all we need to know. If the U.S. lacked the ingredients –had no raw materials, or machining capabilities, or no trained workers – then we could argue, if we deemed car making essential to our well being, that General Motors indeed needs to be subsidized. But we do have all those things –- we simply have crippling labor agreements that go back decades and that have turned our auto industry into a mini welfare state.
Some argue that we need to bail out the Big Three for national security reasons. That is bunk. Our defense industry is in great shape, and does not rely on Detroit. We’re not about to send Ford Expeditions to Afghanistan, as far as I know.
The truth is that our auto companies are not well managed.
They cannot respond to changes in oil prices and consumer tastes quickly because they are not set up to be nimble and flexible. For decades they allowed foreign companies to nibble away at their market share by making more reliable, better designed cars. Detroit has had plenty of opportunities in periods when the dollar weakened to fight for market share. Instead, they were content to raise prices and profits.
That’s because auto company managements suffer from the same short-term thinking that plagues the leadership of many other U.S. companies. The attraction of milking the last buck from making high-margin SUVs overpowered the near-certainty of a rise in oil prices and ultimate collapse in demand for their number one product. A longer view is especially important when you are unable to turn production lines on a dime; while foreign companies appear able to look ahead, ours are focused on the next quarter.
No one wants to see American workers lose their jobs. But it is an absolute certainty that if the government steps in to subsidize the auto companies, workers (and taxpayers) will ultimately pay the price. Eventually, unless the industry restructures in a meaningful way, our auto companies will disappear.
What must happen is a serious reworking of the industry’s labor agreements, restructuring of its financial obligations and new management that is charged with making these companies sharper, more nimble and more competitive. New executives should be handed incentives aplenty, based on five-year performance targets, to get the job done. Displaced workers need help with retraining, and with relocating, if necessary. It won’t be easy, but it is inevitable.
We want a U.S. automobile industry –- but one that can stand, and compete, on its own.
? ) I used to work in Janesville for my Father's plumbing and boiler shop. As you are probably aware, GM has built the yukons, suburbans and such there for quite a while. Even as someone who worked in that city and did not even live remotely close, I have heard enough stories to warrant the existence of these perceptions.
