This an interesting chart and it highlights why bailing out the car manufacturers won't make a difference. It will buy them a little time until they declare bankruptcy. And go to Dr. Perry's Carpe Diem blog to read more. I especially do not like the job banks, where able bodied workers go to loaf for a shift and wait around to see if they are needed. They never are, but they get paid.
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US auto makers have had been plagued with excessive union costs and bloated, under-funded pensions for the last few decades. Management has done nothing to address these core issues so I have zero confidence that same management group will take appropriate actions to improve using my hard-earned taxpayer dollars.
Their shareholders have paid dearly for being asleep at the wheel and for not forcing Boards of Directors to take more decisive action - a mistake I'd prefer not to make if our collective funds are at stake.
While I'd prefer not to bail these guys out, I suspect there's too many political influences to prevent it. However, if we go forward with this plan there better be serious strings attached:
1) Swap out management
2) Negate all union contracts
3) Revise pensions - do better than than the bare minimum but put more in-line with most other industries; convert health care benefits to cost effective HMO coverage
4) Significantly curtail production of older, tired brands (i.e. Buick, Lincoln, etc.)
5) Focus on just a few car models (e.g. like just one Truck, SUV, Van, Car, Compact - do we really need 30 types of each?)
6) Redirect what's left over in making interesting, green cars that people want (i.e. Tesla Motors)
Of course, that's just my two cents. I recognize this might be a bit harsh but if they don't make major changes, you can count on upstarts in China and India (i.e. Tata Motors) to step in and make these types of decisions for them.
I agree with Eric. I don't think the government should bail out the Big 3 at all. I think that they need to "sink or swim". This sounds harsh but why should the government step in and reward them for poor choices. It's welfare for big corporations. I don't see the government knocking on my door to bail out Lightwave Foto from the sluggish economy which is directly reducing the amount of income generated from wedding photography.
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