Terry Mitchell

Should We Bail Out the Big Three?



Posted: Monday, November 24, 2008

by
http://commenterry.blogs.com

I don't think taxpayers should be forced to bail out Ford, Chrysler, and General Motors. They got themselves into their present predicament thanks to poor management, low quality products, aversion to modernization, and too much deference to the powerful United Auto Workers union. Now, does that mean we should allow the Big Three go under? No, that would not be in our best interest. Their demise would create a ripple effect that would likely result in hundreds of thousands of U.S. jobs being lost. Still, I think a little blood-letting is in order for the Big Three at this time.

What the federal government should do is grant them a special form of Chapter 11 bankruptcy which would include some incremental loan guarantees that would ensure that they emerge from it as stronger companies. However, there would be a catch. These three companies – including their boards of directors, stockholders, management, unions, employees, and retirees – would have to agree to some serious restructuring.

Their boards of directors would need to agree to steer their companies in the direction of higher quality and more fuel-efficient vehicles – along with the implementation of measurable goals to gage their progress toward this end. Their stockholders would have to agree to forfeit any dividends for a period of at least five years. All levels of their management, including their CEOs, would have to agree to severe limitations on their salaries and stock options.

Their unions, especially the UAW, would have to agree to a rollback of much of the power and influence they've gained over the years. Their rank-and-file employees would have to agree to cuts in hourly wages and benefits. Retirees would have to concur with similar decreases in pensions and benefits. Those who took early retirement and are still younger than 60 (and are not disabled) would have to accept even deeper cuts in pensions and benefits.

The current dire straits of the Big Three could well turn out to be a blessing in disguise instead of a disaster. It all depends on how our elected representatives in Washington respond. Bailing them out would not be the right thing to do, but allowing them to be hoisted on their own petard is obviously not the answer either. Putting them under a special form of Chapter 11 bankruptcy, as I have suggested, may be the solution. If nothing else, it would bring the days of multi-million-dollar CEOs and $50-an-hour assembly line workers to a close for the U.S. auto industry.
 
Terry Mitchell is a software engineer, freelance writer, amateur political analyst, and blogger from Virginia, USA. He posts a least one article a day to his blog - http://commenterry.blogs.com - on subjects such as current events, politics, technology, society and culture, religion, health and well-being, self improvement, personal finance, trivia, and sports. Terry is also the owner and operator of a website that is dedicated to allowing U.S. citizens to find all types of insurance at reasonable prices.  
 
This Article has been viewed 896 times. (Not updated in real-time.)
Top-level comments on this article: (2 total)
» left by Jennifer Cuddy
 3 years 74 days ago.
I think your stipulations for the CEO's and fuel efficent vehicle production is a good idea, but I don't see why the unions should have to suffer. In fact, if anyone should be bailed out, it should be the workers in danger of losing their jobs, pensions, etc..first.
 
However, because we are running out of oil very soon..I think the entire auto industry is in need of reform. Unfortunately, even if we all changed to hybrid cars, this still would only reduce energy consumption by only a quarter or so amount, so they say, but better than nothing. And it's a start. We need to change over to solar energy and electric cars post haste!
» left by straight talk
 3 years 72 days ago.
111 fans. Follow straight talk on twitter!
Ys Terry "Their unions, especially the UAW, would have to agree to a rollback of much of the power and influence they've gained over the years. Their rank-and-file employees would have to agree to cuts in hourly wages and benefits" Americans must learn to take less. Yes we trust management to us right [right to work states all over] Their program Terry, spelled out clearly for years by them and their new Global spead America everywhere dream. Fact Terry fact.  Now I do not condone some of these contracts and believ greed was involved and you are right perhaps fait is applicable, but here lies the root of it all. We do not even discuss National Security, no never, It is never included in anyone's discussion. You know maufacturing capabilty, industry, parts, vehicles, tanks? Do we  blindly "trust" our foreign friends to provide. Do you want to place your families well being into the hands of foreign powers? What am I getting at? Terry your wise enough to know.  Loan yes but not as we are doing with the banks, a free ride. Yes what you
are saying indirectly is low wages, limited benefits is acceptable. That says a lot about America today. I ask what about your kids and their future? Just questions and concerns. All the best this day. Sincerely
We want your comments! If you can read this, you don't have javascript enabled, so you can't use this comment system. Please enable javascript.