Nov 19 2008
Let Detroit Go Bankrupt
Mitt Romney has a great op-ed piece in the New York Times. Everyone should read it and heed it. Speaking out against the bailout, Romney provides his own prescription to fix the failing auto industries. Just three of his common sense suggestions are:
1. New labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota.
2. Reduce retiree benefits so that the total burden per auto for domestic makers is not higher than that of foreign producers.
3. Get rid of the current management team and bring in an entire new crew.
The one thing Romney did not mention is government getting off the automakers backs and permitting them to make vehicles the American public wants to buy.
IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won’t go overnight, but its demise will be virtually guaranteed.
Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check.
