Orderly bankruptcy for automakers
The Bush administration, including Treasury Secretary Henry Paulson, is still in talks with the three automakers from Detroit and the United Auto Workers (UAW), trying to decide just how the Big Three will receive federal help to stay alive. President Bush seems to be convinced the economy can not withstand the effect of the failure of General Motors, Chrysler, or Ford Motor Company and he is determined to find a way to help them. With the failure of the automaker bailout bill in the Senate, it appears the option most likely to be agreed upon is an “orderly” bankruptcy.
Actually, if the economic situation were not so dire in this country, it would be almost funny to listen to federal officials, such as Paulson, mince their words and do what they seem to do best, beating around the bush and never getting to the actual point. For instance, Secretary Paulson had this to say at a business forum Thursday night. From The Associated Press:
“If the right outcome is reorganization or bankruptcy, then isn’t it better to get there through an orderly process?” Paulson asked.
Paulson said President George W. Bush wants to avoid bankruptcy – “if it can be avoided.” But Paulson said the No. 1 priority was getting U.S. automakers back on a viable path. Part of that effort, he said, would require all sides making sacrifices to boost competitiveness with foreign carmakers.
“It’s difficult to do such things outside of reorganization,” he said. “But sometimes that can be successfully done.”
“When you look at the size of this industry and look at all those that it touches in terms of suppliers and dealers … it would seem to be an imprudent risk to take,” he said.
Correct me if I am wrong, but hasn’t the entire point of the discussion about the automakers been the fact that they have not changed or reorganized their business practices to match what is needed in today’s world? Why is it that the folks in Detroit seem to think they can not reorganize themselves without federal help?
This viable path Paulson is speaking off should have already been well traveled and probably would have been, had it not been for the UAW and their insistence that the three automakers pay such high wages and benefit packages and driven them to this point in time. That’s the reason a vehicle like a Chevrolet Tahoe or GMC Yukon cost at least double what I paid for my house and one of the biggest reasons these companies are so close to bankruptcy. It’s also one of the reasons Detroit can not seem to compete with foreign companies like Toyota and Honda.
That’s my take!
Larry
