Bail out the auto industry, you say??
$25B sounds like a lot of cash to normal people, but it’s barely a band-aid for the automakers’ troubles. If we do this, they’ll soon be back at the trough for more.
The problems with U.S. automakers are cost of labor, stupid supplier agreements, and way, way too many dealerships.
I say allow them to go into bankruptcy, use that as impetus for renegotiating labor agreements, changing inflated supplier contracts, and allowing many borderline, cash-driven dealerships to go away. If the government simply MUST provide bail-out cash, do so as a guarantee to whomever comes forward with post-bankruptcy DIP financing.
At least then it’s a better structured industry receiving a bail-out.
A problem here is perception. Many seem to think that “going into bankruptcy” necessarily means “going away,” and that millions of jobs will go away as soon as an automaker declares bankruptcy.
It means potentially allowing a renegotiation of debt, of decades of bad labor agreements, poor supplier relationships, and some reduction in the “dealer-on-every-corner” mentality.
…and just to be clear: the UAW President, when not fighting automaker mergers/consolidation, has said they will push to “use” bail-out money to fund current retiree health care.
We should consider driving those inefficient monoliths TOWARD bankruptcy, not helping them avoid it.But that’s just me…