GM, Chrysler, and the White House

[Anonymous]

I am probably more than a casual observer because I was affiliated for more than a decade with a GM subsidiary, but I have some questions...

1. Is a domestic auto industry in our country's best interest? I think economically it doesn't matter, but for defense it probably does. Having a domestic auto industry (and aircraft and ship building) in a time of war is pretty important.

2. What does this mean for unions? I know that the bond holders are going to suck wind, and my stock will be worthless (it really is anyway) - but the unions are going to take big hits here too. This seems like a strange position for a Democrat administration to be in...

3. What about the downstream jobs depended on GM, Chrysler? I suppose the White House has weighed that concern against bail out costs and prefers the job/business loss (in a set of clearly bad alternatives.)

Clearly the markets are rattled about the idea of GM closing... what am I missing?

[Anonymous]

Amazing, no one has an opinion on any of this?

[Anonymous]

I can understand the rationale behind the gov't stepping in and helping out the banks and AIG. I do not believe they should be bailing out the auto industry, nor telling them how to run their companies. The only way for them to truly remain competitive is for them to restructure on their own. Many will file for bankrupcy, and some will not survive. However, unless the gov't plans to keep on subsidising the industry from here on, then they should stay out. I don't see where a billion or trillion here is going to make much of a difference in the long run. If they want to provide incentives for the automakers to make safer or more environmentally friendly cars, then that is a different issue.

What I am not sure about is how many military vehicles are made assembly lines similar to commerical cars/trucks. So I'm not sure how inter-related the two are.

[Anonymous]

I think from the beginning they should have gone into bankruptsy to renegotiate the contracts with the unions. I am mad at President Bush on this as much as Obama because I think no one wants to be the President to have this fall apart and sometimes leaders have to make tough call. What is the problem with the unions? There is too much legacy pay and healthcare being shouldered by the company. There are a lof of former auto workers who put in their thirty years and retired at 48 walking around--pack on that life expectancy is constantly going up and you have more workers being paid who aren't working. This is why auto makers who aren't unionized are actually turning a profit. I don't think we can make guys and gals who are 75 get another job now but during a renogtiation can possible ask employees who are in good health who choose to retire at 50 have to put off benefits until they are 65--think social security should be put off until 70--or something along those lines. Unions in general have too much power and hinder productivity. If also think it was a bad move to get rid of Rick Waganeer--he was actually a good executive who brought about a lot of change but couldn't get the union aspect under control unless they went through bankruptsy--now we are essentially having the white house run a company and the President has absolutely no business acumen and the person at the head of GM is really a figurehead now to the administration. In the end if they all go under--another car maker will move to the front and life will go on--I also think secondary markets for GM car parts and fixing will sprout up in a new business model. What all people should realize that when they work for a private company, you should not bank on some kind of retirement package the same way you would with a municipality-why..companies can go under..that is just the reality of the world moving forward. Also--retiring at 50 and expecting a company to pay for you forever is just not good.

[Anonymous]

Anonymous wrote:I think from the beginning they should have gone into bankruptsy to renegotiate the contracts with the unions. I am mad at President Bush on this as much as Obama because I think no one wants to be the President to have this fall apart and sometimes leaders have to make tough call. What is the problem with the unions? There is too much legacy pay and healthcare being shouldered by the company. There are a lof of former auto workers who put in their thirty years and retired at 48 walking around--pack on that life expectancy is constantly going up and you have more workers being paid who aren't working. This is why auto makers who aren't unionized are actually turning a profit. I don't think we can make guys and gals who are 75 get another job now but during a renogtiation can possible ask employees who are in good health who choose to retire at 50 have to put off benefits until they are 65--think social security should be put off until 70--or something along those lines. Unions in general have too much power and hinder productivity. If also think it was a bad move to get rid of Rick Waganeer--he was actually a good executive who brought about a lot of change but couldn't get the union aspect under control unless they went through bankruptsy--now we are essentially having the white house run a company and the President has absolutely no business acumen and the person at the head of GM is really a figurehead now to the administration. In the end if they all go under--another car maker will move to the front and life will go on--I also think secondary markets for GM car parts and fixing will sprout up in a new business model. What all people should realize that when they work for a private company, you should not bank on some kind of retirement package the same way you would with a municipality-why..companies can go under..that is just the reality of the world moving forward. Also--retiring at 50 and expecting a company to pay for you forever is just not good.

Agreed. It turned out that the bailouts were a waste. They should have be fast tracked into bankruptcy.