We want some mo' ...

A New York Times headline today read, "Automakers Seek $14 Billion More in Aid." And the Wall Street Journal article reported that automakers may need "up to $21.6 billion more combined in bailout loans to put them on the road to recovery." GM and Chrysler both said that they'd need additional funds, or else they'd have to file for bankruptcy. This article states that they also claim that

the cost of a bankruptcy reorganization, with the government providing financing to help it through that process, would be far greater than their latest loan requests. Without such help, the companies would have to liquidate, creating staggering new job losses.

First, let's just point out a few things. The phrase "latest loan requests" was used. Apparently, the first infusion of money was insufficient, so a second round is requested. What can guarantee these additional funds will work? This is? was? the free market we're talking about, right? So--what will keep these automakers from requesting additional funds after the new $14 billion is disbursed? At what point will these loan increases exceed their purported cost of bankrupty with government financing? Are we factoring in the cost to industry in general -- Are actions like this similar to trade protectionism with tariffs, etc. that will ultimately hurt the American auto consumer because of the responses made by foreign auto manufacturers.

 

Second, let's note that of the "Big Three," only two have asked for assistance. The third, Ford Motor Company, "has not received federal assistance and has no requests pending."

 

What are they doing, then?

 

Maybe they've paid attention to another NYT article (op-ed) that came out last November, that pointed our minds back to the 1950's, when American Motors was facing turbulent times following the death of its president and the company was struggling to survive and find a way to compete with the "Big Three."

 

This op-ed pointed out that during this time, the new president at American Motors cut his salary and other executive pay, personally bought stock in the company, and communicated with the workers directly. In this day of union stranglehold on the automakers, employees need to realize that American automakers need to be competitive with foreign automakers; that the costs cut on the autos to balance the increased labor costs means lower quality and less style options; and that they're banging their head on the wall of the dead-end street that Reuther warned of back in the 1950's - 60's.

[Walter Reuther was the head of the United Automobile Workers, who told the new president of American Motors, "Getting more and more pay for less and less work is a dead-end street."]

The op-ed suggests some similar cost-saving measures for our day, based on the American Motors turn-around story. "Get rid of the planes, the executive dining rooms -- all the symbols that breed resentment among the hundreds of thousands who will also be sacrificing to keep the companies afloat."

 

So what did Detroit do? "Big Three auto CEOs flew private jets to ask for taxpayer money." At this meeting with lawmakers, the questions were asked, (1) did any of you fly here commercial? [no], and (2) are you planning on selling the jet and flying back commercial? [no]. In their defense [?!?!], executives told lawmakers "they are streamlining business operations in general."

 

So, who was the president of American Motors that turned it around without government bailouts and by personally sacrificing along with other cost-saving measures to keep AMC in business? George Romney. Who wrote the op-ed? His son, W. Mitt Romney, who turned around Bain & Company, the 2002 SLC Olympics, and other companies.

 

GM and Chrysler want more of our taxpayer dollars to avoid bankruptcy? What have their executives done to show that they're willing to sacrifice and find tough ways to become solvent? The "Big Three should" follow Romney's advice and make some tough, sacrificing decisions. And Congress should follow his other piece of advice: Let Detroit Go Bankrupt.