3 Green Pre-Conditions for a Big Three Bailout

The problem is excessive legacy labor costs, excessive capacity that they are unable to shut down because of labor contracts, and poor management.

Therefore, the only chance for them to survive is to find a way to reduce the pension benefits of retired workers, close most of their SUV plants, and can the management.

The best way to improve fuel efficiency has nothing to do with complicated mandates on a state-by-state basis and everything to do with fuel prices. As long as gas is cheap, customers and producers will favor big, powerful, inefficient vehicles.

The US needs to phase in a big fuel tax as soon as this recession is over. Germany has high fuel prices, pretty good emissions regulations, and a successful domestic auto industry. There is no reason the US can't do the same.

The big Three CEOs are coming to the USA Government -- the taxpayers -- like naughty children who have gotten themselves into a mess. Flying private jets shows they are clueless of how to change their behavior.I do not believe we should bail tem out.

What we do is buy stock, and become a major investor.

As such we can or demote the upper management to receive the same wages as factory workers, who at least manage to contribute and produce something. We bring in dynamic leadership and even advisers or board members. Pehaps they can retrain these CEOs.

The unions must cooperate, because a worker with a job and some benefits is better off that one with nothing.
When a kid comes to a parent to fix his mess the parent takes over and establishes rules so the kid learns.

I agree with the article that green initiatives need to be part of the plan. I own a Hoda as I got tired of fixing mu USA car. We need the big three but not as they are now.

Judy Rey

I wrote on this just a few days ago - at this point there is no reason that we should be handling the auto companies with kid gloves. If they want a bailout, we can give it to them if they follow our rules: In addition to stopping legal battles and mandating efficiency increases as described above, EVERY car that they produce from here on out must be compatible with E85 or B99, be plug-in hybrid or full-electric. This is not a terribly difficult task and with minor re-tooling could be accomplished in a matter of months.

If the big 3 do not want to make these changes, then they don't get the bailout. There are plenty of other companies like Aptera and Tesla that are making a difference and will have the opportunity to stand up and take the place of those in Detroit.

If the problem is excessive legacy labor costs then attempts should be made to transfer that burden to the State, however that would mean a public healthcare system. Taking away earned rights from workers without some form of restitution would be tantamount to robbery.

Excessive capacity ties into the fact that Detroit is producing more vehicles than it can sell, which basically means market misalignment rather than labor contracts. I do agree the should retool their SUV plants to make more fuel efficient vehicles. Canning the management wouldn't be a bad idea either.

I also believe that the US automakers have not been leading the market, they're being dragged behind it. That has to change. Technology is already available to make cars that are 3x4 times more efficient than now. A quantum leap is required, incremental changes in efficiency have been overtaken by additional gadgets and the like.

I am in complete agreement with the previous commentator about the need for a big fuel tax as soon as this recession is over, but can"t imagine any US government doing it.

Also while it is true that Germany has high fuel prices, pretty good emissions regulations, and a successful domestic auto industry it's also true that they are being very Detroit-like with regards to EU regulations on exhaust emissions since they make the big, luxury cars.

They should make the money pre-payment for a complete replacement of the government vehicle fleet with plugin hybrids. The feds have spent billions on "flex-fuel" vehicles (that of course only run on gas), why not get something useful and eviro friendly?

And how about transparency. Right now GM's Cadillac SUV has a 15K discount and they are probably still making a profit. What is their CEO to line worker pay ratio and is it reasonable?

The previous comment seems to me pretty much right on, though I'd prefer the taxation done differently. A phased in comprehensive fossil carbon tax seems more suitable to me, but with a 100% rebate equally distributed to citizens. The rebate could be spent for individual conservation measures like a more fuel efficient auto or more home insulation or home solar PV panels.

If I'm not mistaken GM and Ford are competitive outside the US with outside the US built GM and Ford autos built to outside the US designs so the basic knowledge to build world competitive autos exists within the two companies. Maybe the auto execs could explain why they aren't able to build those designs in the US. DB

Complete game changing strategy! Why doesn't anyone think of just wiring the roads for electric supply and having fully electric cars that suck the energy from the road? We're talking full power, not some flimsy little rechargeable thing. Obviously, this would start with hybrid (rechargeable/fully electric) phasing into fully electric with time as more roads are wired. Wouldn't that be a good place for public money and investment for the future. Produce clean, relatively cheap nuclear power and put it to good use! How hard can that be? If we bail out the Big 3, they should be forced to produce electric cars with full power!

Expecting the big 3 to be able to produce fuel efficient quality vehicles that people will want to buy is like expecting Microsoft to produce a good operating system or mp3 player. It is just not in their corporate culture. The only option is to let them fail and let new, innovative companies take their place. The bailout would just delay the inevitable while holding back other innovative transportation solutions.

Detroit, specifically GM Execs, should pay reparations for selling EV-1 Battery patents to Cobasys. Owned by texaco they subsequently barred production EV capable batteries. They should also pay reparations to the states where they brought frivolous lawsuits against the taxpayers. Wait, they're broke, and now they want us to pay them to stay in business? Just so they can go on making lawyers rich and our elected governments poor? America needs change, and that means a fresh start, Free from parasites.

screw all of them. If the unions want to back their employees, they can endorse a federalization of the big 3- turn the companies into a government owned corporation. The board of directors can be the President Elect Obama's Cabinet, and since the CEO's obviously can't get their act together, make them a senate confirmable federal employee, and treat them as such. Lower paychecks, no bonuses, and the ability for them to be fired for screwing up. Mark the mpg efficiency for a 45 mpg standard within 3-5 years, and a constant 10% improvement every year thereafter with no moratorium. In under 10 years we'd be over 70mpg, or forced to find other alternatives. Either one is a massive improvement.

amazing how the blame is being shifted onto the workers.

corporate politics sucks man.. It's so counterproductive and irritating.. like gene patenting... the shit is flying high now... just wait till it hits the fan.. then we'll all be in trouble because we cant mess with corporations because they've finagled their way past the legal system to get away with anything and everything.. thats not saying the legal system is wonderful either.. it's crappy as well..

I've finish ranting about the corporations and the law. Now about the big 3..as far as I'm concerned they can all go to hell. I'm worried if hell's going to accept them or not..

I am torn, I kind of say screw the 3 big companies but there will be a lot of people put out of work...screw the dumb CEO's.
There has to be an enforcement if we bail them out of using more fuel efficient cars aka hybrids and a game plan for how these car companies are going to help our environment rather than pollute our environment. What about all government cars now have to be hybrids? why can't we start getting mad at the government for not using more fuel efficient cars?

Those are very good preconditions to put before the auto companies if they want a financial helping hand (or several). There is a need to force their hand towards eco friendly, green and socially responsible autos which they obviously do not want to produce on their own volition.

Some great points raised here.

I think that even if they are given a bail-out with no strings attached, the auto industry is headed in such a direction that they may choose to make better cars of their own free will. Capitalism is about selling people what they want, and with cheap oil nearing the end of it's lifetime, people are starting to want better options.

Under a completely capitalist society, of course, there would be no bail out. The companies would have to sink or swim with the times. I have no problem with the demise of the companies, but I am concerned about the factory workers. Maybe that's why I'll never be a true capitalist :)

With regard to the auto industry. I think everyone should watch the movies - Who Killed the Electric Car, Preston Tucker- the Man and His Dream, and Flash of Genius.
I am sure there are Hollywoodisms in them but, awesome stories of people and how lousy the big auto companies are.

Maybe we should give 1/2 a billion to Tesla to bring out their sedan and other more affordable electric goodies. Let's face it, they are operating just about as lean as anyone can due to necessity. They are the way of the future. I wish I were some rich venture capitalist so I could invest in them.

Or just go ride a bike.

vsk

I'm not aware of anyone "blaming" the workers... blaming the UAW isn't the same thing. The workers are being rolled out for "pity-points", in order to convince America that handing Detroit money to do what they've been doing is the right thing to do.

Make no mistake, Detroit has been acting like a junkie that knew it had a problem, and knew they'd have to pay the piper eventually, but continued to act as if it didn't. I agree that being taken over by more efficient companies is the best thing for Detroit right now, and barring that, federalization... and in either case, sacking the CEOs and board members (who are as culpable for encouraging greed-driven behavior) and replacing the top echelon completely. Our tax money would be better spent on unemployment assistance to those workers, than thrown at the existing Detroit heads.

I'm really opposed to mandating a specific technology (e.g. hybrids). Instead, mandate the benefits — low fuel consumption and low emissions. Mandating a specific technology will only damn ingenuity and creative thinking. Why should I care about how they give me what I want? Just give deliver the results.

The major domestic auto manufacturers have done a disservice to this country too many times to count. A couple of my "favorites" are buying up street car systems so we can have the (pollution) flexibility of bus transit; not producing ANY results from the government sponsored (read: our tax dollars) Partnership for the Next Generation of Vehicles that were to get ~ 70+ mpg; and GM's famous selling of the patent for a EV battery that would be the solution to the range problem for battery electric vehicles.

We should revoke that patent right, have the government repay the oil company exactly what they paid for it, and then license the use of the technology to anyone capable of using it (to recoup the money our tax dollars spend getting it back). If the government has the power of eminent domain for land use, surely there's some legal mechanism that we can throw out as a national security issue when we give them their money back.

And yes, remove the vultures who are running the domestic auto industry into the ground (without their golden parachutes). There needs to be some adjustments in the union wage scale as well. Why should our tax money subsidize a system that pays the average auto worker substantially better than the people who are supposed to support bailing them out.

I don't think you guys really understand what the auto industry has been going through.

For one thing, they have been making great strides in fuel economy. GM has been working on the Chevy Volt for years now, and when it comes out it will get better gas mileage then even the Prius.

They have also been working on lowering their employee costs and they soon will have labor rates equal to that of the forign auto makers, but they won't kick in until 2010.

And no one was able to predict the credit crisis that is now keeping people from buying cars. The big three only need a loan to get them through these tough times. Once the credit market clears up and the lower wages kick in these companies will again be profitable.

I also don't think you guys realize what will happen to the economy if the Big 3 collapse. If that happens more than 3 million people will lose their jobs almost overnight. The ripple effect of this loss would affect many more people in this country.

Is it really worth millions of American losing their way of life because of some mistakes made in the past?

Instead of just bank rolling them by giving them a blank cheque, how about saying the government will buy all our cars and trucks from you for x number of years, AS LONG AS THEY ARE ELECTRIC. (Or some other viable alternative.)

That way the auto makers will have a guarantee of a base income. The rest will follow. I mean come on. The technology is here now. Why do we have to wait until 2020 or some ridiculous future time frame?

Maybe I'm just a dreamer, too naive about business and politics. It doesn't seem to have to be as complicated a solution as I'm hearing. Make it happen.