Automakers Are Lining Up Aid, But Just Don't Call It a Bailout

The Washington Post ^ | 12-4-2005 | Jeffrey H. Birnbaum and Sholnn Freeman

[Iris7]

Troubled U.S. automakers and their allies on Capitol Hill are seeking billions of dollars in aid from the federal government ranging from health coverage for their workers to extra tax write-offs for themselves.

They're also asking for one rhetorical favor: Please don't call the requests a bailout.

"I don't view it as a bailout," Sen. Carl M. Levin (D-Mich.) said.

"We're not looking for a bailout," agreed William C. Ford Jr., chairman of Ford Motor Co.

The "B" word has been taboo ever since Chrysler Corp., faced with impending insolvency, sought and narrowly won $1.5 billion in loan guarantees from Washington in 1979 and 1980. The company eventually borrowed $1.2 billion and repaid the loans in 1983, seven years earlier than was required.

Nonetheless, the notion of the American taxpayer saving a company with a large and quick fix has pretty much gone out of style and has not been repeated since, with the exception of loan guarantees to airlines after 9/11. Even though General Motors Corp. and its rival Ford Motor now face serious financial straits, both are studiously avoiding public condemnation by spreading their aid requests widely among many types of government policies.

Taken together, however, the components of their wish list would cost tens of billions -- far more than Chrysler ever dared to seek.

[Piquaboy]

Yeah! We really need to pay for union workers health care. What a crock of BS.

[nyconse]

Absolutely, other freepers bash the union guy trying to raise a family with a mortgage etc. This guy makes no where near what some anti-union types think. Yet, they think, it's ok for the CEO of a failing company to rake in the money. The guy is a failure and should be fired! You are also correct to view this as an assault on the middle class.

[nyconse]

If enough American comapanies go under, you will be paying for everyone's health care ie national healthcare.

[nyconse]

There has been plenty of mismanagement. However, I do not believe the best management can address global policies which destroy American business-policies which give preference to foreign companies actually.

[Iris7]

Going to be a big political issue. The results will be a crucial moment.

I know lots of those people, am one, and wish that the good would not have to go down with the bad. The bad are everywhere top and bottom.

[ColdSteelTalon]

Who is going to bail out the US when we go bust?

I hate to be the one to break this to you but the United States has been bankrupt for a very long time. We are just printing money against debt instruments issued by the Federal Reserve (A private bank) against the United States government (thats you and me). Some day those dollars will have to be repaid. And it will be on the backs of our great grandchildren.

[afz400]

Seems like the last time we did this (early 1980s) we imposed import quotas on foreign cars, which only increased the interest and demand for Japanese cars in the US. Ford and GM kept on making crappy cars while the CEOs pocketed millions. Japan reinvested their profits and started making large luxury cars that weren't gas guzzlers. Now it seems we have lost the large truck market it to them as well.
So Ford wants taxpayer money to start building hybrids? Guess what - the Japs have new non hybrid engines in the works that will make hybrids obsolete. We are such fools that it seems deliberate.
Why can't Ford and GM at least just steal ideas from Japan like they do to us? How can anyone make a more boring car than a Toyota Corolla? Answer - GM.

[nyconse]

Small gas efficeient cars like the Geo sold badly-very badly. You couldn't give away small cars for years! SUV's ruled the market.

[palmer]

Japan and Europeam car manufacturers do not have to meet mileage standards.

See CAFE Overview - Frequently Asked Questions

Most European manufacturers regularly pay CAFE civil penalties ranging from less than $1 million to more than $20 million annually. Asian and domestic manufacturers have never paid a civil penalty.

[Iris7]

The situation is getting critical. Your comments are very appropriate. Imagine a guy getting $10 and hour paying for UAW pensions of $4,000 a month and full health care, maybe another $1,000 worth.

Got to leave, will answer everyone after mass.

[nyconse]

The Japs develped such cars via Japanese government subsidies.

[Gang of Five]

Nope. My first new car was an American car and it was a piece of s**t. There were way too many problems with it to do anything other than blame, at least in part, the workers who assembled it. Have you ever hired contractors to do work in your home and been frustrated because you had to stand and watch them do the work and they STILL did a slipshod job? If so, were you frustrated and angry because you were left with a substandard result because they thought ONLY about getting their money for as little as possible? It's the same feeling when you spend $20K-$30K on an American car. I've bought Hondas ever since and the latest one was built in Ohio. They've been great! I'll never go back.

[OldFriend]

There are 'foreign' autos being manufactured right here in the USA with American workers. How is it that they are making money and the old line automakers are not successful?

[ColdSteelTalon]

Its the leadership thats been collecting huge bonuses the past 10 years for pushing gas hog trucks and cars.

A very good point, You can't tell me that an exec that makes 100 times more than the average worker makes, for even poor performance is fair. I don't care for Unions but I will say this, they would rather see a company go bankrupt than to see their workers give up more and more benefits and compensation and the company just ships jobs to China anyway.

[Gang of Five]

UAW?

[afz400]

"The Japs develped such cars via Japanese government subsidies."
My point is how can we trust our automakers with our taxpayer money again when all they did the last time was to vote themselves HUGE bonuses. What ever happened to reinvesting profits? Has US capitalism become nothing more than expecting taxpayer bailouts for making crappy cars for years? Shouldn't someone in GM and Ford management lose their jobs for going ahead with loser cars that no one wants or should it always be the worker that gets laid off?

[ARCADIA]

How is it that they are making money and the old line automakers are not successful?

Despite what you often hear on these pages; the real problem with US manufacturers stems from poor management and a hostile regulatory environment. It is hard to gain global market share when you no longer invest in your company, when you no longer lobby for industrial regulatory relief, when you have sold your technology to a foreign company who will directly compete with you in a number of markets. You cannot manage a company successfully with senior executives, who are so grossly over compensated, that the success of the organization beyond the immediate period is no longer relevant.

[Mark was here]

Absolutely, other freepers bash the union guy trying to raise a family with a mortgage etc. This guy makes no where near what some anti-union types think.

Talking about someones needs, really doesn't mater. He is trading what he brings to the table for what the buyer has to offer. If the buyer does not benefit from the purchase, what sense does it make for the buyer?

Would someone go to a Mom and Pop shop and buy a $40,000 item just because the store owners seemed like nice folks and had needs?

If unions want to organize and sell their labor as a package, that is fine the buyer of the package should be able to chose between competing service providers, and no service provider should be given a government granted monopoly.

[afz400]

"If unions want to organize and sell their labor as a package, that is fine the buyer of the package should be able to chose between competing service providers, and no service provider should be given a government granted monopoly."
The missing part of your equation is that China has organized their labor force by enslaving them. The US has to figure out how to combat this. One component of combating this is the participation of the CEOs of Ford and GM. However, they are not trustworthy, IMHO. Based on past actions they will just take the taxpayers money and keep it for themselves. They alread got away with sticking the taxpayer with the employee pensions, and now they want more - the CEOs and owners need to show some new products or were finished as an auto producing country.
(As a sidebar, if we ever go to war against China, has anyone thought about how are we going to make boots, clothes, etc in this country? - We're rapdidly losing a work force that knows how to make anything. We sure know how to buy useless junk at "Christmas", however!)

[nmh]

This is ridiculous!

Name ANOTHER business that SCREWS up and has OUR government bailing them out.

They deserve the SAME fate as other businesses that screw up - go out of business or sharpen up in business.