Enough already
The bailout was about the banks. We have discussed in this space, until we were blue in the face, that the frozen credit markets were, and are, at the heart of the problem. Why then, are we throwing more taxpayer dollars at the auto makers? They should have declared Chapter 11 in the first place and reorganized, restructured contracts, sought concessions, improved workflows and developed a more profitable business with a better product.
Now, the Obama administration is giving GM and Chrysler more of our money. Specifically, GM wants another $16.6 billion and Chrysler is asking for another $5 billion. Where are the good old days when the government gave away millions?
The funds going to Chrysler would help with its merger with Fiat, a small car producer. GM will receive enough funds, according to the administration, to finance them over the next 60 days while they continue to restructure. GM will seek to gain concessions from all stakeholders. Failure to get all their ducks in a row over the next 60 days means that they will then have to consider Chapter 11. So the taxpayer gets to foot the bill for several billion more before the inevitable happens.
Auto companies must sacrifice
Some, in the know, say that there is little forward movement with the unions on concessions. The very notion that so much spending, in the form of taxpayer dollars, is meant to grow jobs and GM has had to cut, or is cutting 47,000 jobs is an ironic joke. Chrysler reported in February that it would cut 3,000 jobs. How does this help the economy? Lost jobs and more taxpayer debt.
Negotiations also must take place with bondholders, in order to buy concessions and cut debt by 2/3. Labor costs are also way above Japanese automakers with plants in the U.S. The companies must bring labor costs down to these levels to be competitive. More misguided bailout, with little to show for our hard-earned money.
