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.

[razorback-bert]

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.

Bears repeating for therein lies the problems with Enron, World com etc.

[Erik Latranyi]

Absolutely, other freepers bash the union guy trying to raise a family with a mortgage etc. Yet, they think, it's ok for the CEO of a failing company to rake in the money.

Actually, CEO's get fired at a much higher rate than union employees since those employees have far greater protections than the management.

In the case of Ford and GM, both sides are to blame.....the management for incorrect strategy and design and the unions for making continous, unreasonable demands under threat of strike.

[Sacajaweau]

Build me a car without all the electrical and computer components. Mechanics, mechanics, mechanics. The object is still getting from one place to another and nothing more. We've been frilled to death!!

[Erik Latranyi]

Build me a car without all the electrical and computer components.

Then you would not get the reliability, performance, fuel economy and safety in today's cars.

Yes, today's cars are much more reliable than yesterday's more mechanical cars.

Are there some stupid electronic frills? Yes. Mostly created by trial lawyers.

[ARCADIA]

Yes, today's cars are much more reliable than yesterday's more mechanical cars.

The manufacturing tolerances and designs are better. But, they would be even more reliable without all the electronic garbage.

[Mark was here]

The missing part of your equation is that China

No it was not missing, I was just talking generly about buying and selling.

If you were to hire a lawn service, would you provide the service with your financial data, so they could decide what would be "fair" to charge you?

[kpp_kpp]

management of most companies (esp large enterprises) these days is "in it" for the money for themselves with very little interest in the long term viability of the companies they run or the community they exist within. they take $ (cash) out well beyond what should be rewarded for their work, the spend capital on things that are obvious (with just a tad of common sense) are not going to return, and yes they give some charitably -- for tax purposes not for charity purposes.

as the disease spreads that is what ultimately will bankrupt the U.S.

i am very pro-capitalist... i think small businesses are what keeps this country running. but big businesses and the associated unethical detachment from responsibility are what is driving this country into the ground (the gov itself being the biggest of big businesses).

[Erik Latranyi]

But, they would be even more reliable without all the electronic garbage.

A horse is more reliable than a car, but do you want to go back to riding horses everywhere?

[Dark Skies]

Of course being employed by a failing business is painful for families as well as creditors and investors. But what makes America strong is that good businesses are rewarded and poor ones are penalized.

All businesses must face the music. Otherwise, the buggy and whip industries would still be around. By letting the auto industry and its unions face the music, new opportunities will emerge to replace them.

By bailing them out, we are putting a failed system on life support.

While it may seem frightening, the capitalist system must be allowed to run its course. It is that system that provides the engine for jobs...not the U.S. government.

[RichardW]

I just bought a new Ford Escape Hybrid. Ping me.

[RichardW]

I should also add that I have a new 2005 Ford F-150 that I bought earlier in the year. I think GM is terminal but I certainly don't believe that Ford deserves their fate. Ford had to compete in the marketplace but if they didn't cave in to UAW extortion, GM would have put them out of business in the 50's and 60's. If ever a corporation deserved to be put out of business, GM is it.

[andy58-in-nh]

You are absolutely correct - the ultimate responsibility for the incipient failures of GM and Ford lies with their management. Not that the UAW is blameless, mind you - they continue to engage in ancient adversarial rhetoric and cling to outmoded labor categories. Instead, they ought to be challenging their over-compensated, under-achieving managers to save jobs by making the business competitive again.

Nothing less than a complete overhaul of the current business model will save it. To that end, US automakers need to get back to basics - and figure out how to design, build, and sell cars that people want to buy. Somewhere along the (assembly) line, they forgot how. And when I say "cars", I don't mean "trucks". Ford & Chevy make very, very good ones, but most people don't want to drive them. What most consumers want are well-made, competitively-priced sedans, SUV's, and sports cars. Toyota and Nissan manufacture them in the US in large numbers. Either GM and Ford will figure out how, or they will soon be making nothing but trucks - and competing with Toyota for that market share as well.

[Nowhere Man]

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

I think national healthcare is inevitable, it could be 10 or 20 years down the road, althought it is tough to assign a timetable, but I think it is a done deal except for the minutae. I think the real crumpler in this is as we lose more jobs and companies, you will see a shift of the burden go to the Federal Government, as the saying goes, "nature abhores a vacuum," so if one entity cannot fulfill the need, there will be another that will move in.

It's a shame with all the union bashing and worker bashing that goes on here and in many other places. Sure there are times unions can be culpable in all of this but there are other villains too.

What is the problem that I've seen is that the GOP won by a kitten's whisker in 2000 and 2004, the issues for the latter where homosexual marriage, the war on terror and the Swift Boat vets did manage to eek things out in our favor. However, when the issues of working class and middle class people are not adressed and we continue down this path, there will be people out there that will be willing to compromise on these moral issues if it means that their family will be fed and sheltered.

[Nowhere Man]

ping

[EVO X]

Of course being employed by a failing business is painful for families as well as creditors and investors. But what makes America strong is that good businesses are rewarded and poor ones are penalized.

I had a tour of a modern car plant a couple of years ago. The plant manager commented that the auto industry can be rather cruel at times. Plant closures bring on family problems, alcoholism, and even suicide.

[SmoothTalker]

"The plant manager commented that the auto industry can be rather cruel at times. Plant closures bring on family problems, alcoholism, and even suicide."

Blame the management of GM and Ford for that. I can't imagine a company as well run as Toyota has to close a lot of plants, or run off a lot of workers.

[Cinnamon]

It's a Bailout

[traviskicks]

thanks for the ping. Yea, I saw this article earlier. What a shame that the execs caved into the unions and signed all of these long term contracts they are stuck with. The Unions have bankrupt American business after American business and the automakers are next unless they act quick. Too bad you can't fire people for belonging to a Union, cuz thats what GM et al should do.

For those who would defend the unions check out this on how 12,000 union members get paid for doing nothing except sit around at 'job banks':

http://www.detnews.com/2005/autosinsider/0510/17/A01-351179.htm

[traviskicks]

These companies should not be bailed out or helped one bit.

[ARCADIA]

A horse is more reliable than a car, but do you want to go back to riding horses everywhere?

We do not need to go back to the horse to design a reliable and cost efficient means of transportation. build quality, stay focused on the important features, and you will get there.