Wednesday, November 19, 2008

Automaker Bailouts: My View

On my recent "Citibank Rates" post, reader Stephanie asked:

On a separate note, Michael, what are your thoughts on the possible auto company bailout (or so-called loan)?

If I remember, you're from Michigan, like myself and work for a car dealership? I would be really interested to hear your perspective.

I don't like the idea of a bailout, but I'm worried for my home state!

Stephanie is correct that I do fixed-ops (service/warranty) work for a regional auto group, though I'm not anywhere near Michigan.

Yes, our auto group is heavily GM-weighted. However, of the three carlines I personally handle, only one is GM-branded. (It's a Cadillac store.)

So, Stephanie, since you asked nicely, here's my opinion:

I am sickened and repulsed at what's going on. I'm embarrassed, at a deep personal level, that a company with which I'm affiliated is begging at the taxpayer window. And despite any ramifications for my personal employment, I am singularly against any automaker bailout — just as I've been against every bailout foisted upon the American public so far.

I've debated for hours on whether or not to post on this topic, since it hits so close to home for me. I could probably write about it for hours, too, but I won't.

I will simply say that if I were, in fact, to contact my congressmen (as the multiple emails from GM have advised dealership personnel to do) ... well, those GM suits would be less than pleased at the stance I'd take with my representatives.

In my world, there is NOTHING more pathetic than a broken, mismanaged corporation who sees fit to go begging for Uncle Sam handouts when TSHTF.

After decades of knuckle dragging and in-the-ditch decision-making, it is time for the Big Three to take their medicine. And that means bankruptcy.

(Though I suspect that, in the end, some of that sweet sweet gubmint cash will once again delay Detroit's day of reckoning.)

Hopefully, Stephanie, this answers your question. I'll finish up by seconding a thought from Senator Richard Shelby:

I don't think they have immediate plans to change their model, which is a model of failure. [Source]


— Posted by Michael @ 9:40 AM


Thanks for your answer. I thought it may be along those lines. I am also disgusted by the proposed bailouts. I don't understand why the government is undermining the capitalist society we live in, by bailing out cos when they don't do well-- because of their own decisions.

I personally drive a Honda b/c my Ford was constantly in the shop. I traded in my 3 yr old Ford for a 5 yr old Honda. The Honda has been in the shop a tenth of the times that the Ford was (with undiagnoseable problems, I might add).

The US automakers have sacrificed on quality for the cars that come in under a $50k price tag.

They made their bed.

I do feel bad for the workers who will lose jobs- and what Michigan will look like after it happens. (Will the entire Southeastern part of the state look like Flint, Michigan looks since GM left?)

Hopefully we can find some new industries to invite to our state.

Thanks for your article-- I hope I didn't put you on the spot at all. I just respect your opinion!


I share the sentiment about bailing out these companies. It's revolting to think that the same financial mistakes would cost me the pains of bankruptcy where these companies are given a great big check instead.

However, that's about where the parallel ends. The consequences of my bankruptcy would not cost hundreds of thousands of people to lose their jobs. My mistakes wouldn't decimate entire towns. Not to mention the fact that despite the idiotic mistakes, for years this is what many American consumers WANTED. Nobody buys a Suburban because they need to bring home groceries. It's hard to expect a corporation to turn its back on demand.

It's clear that we can't ignore the plight of the many thousands whose lives will be devastated by this mess, I think the real dilemma is a question of accountability. Does allowing a corporation to fall into a prime-numbered chapter really fix the problem or punish the people who put it there?

The patient has a disease that's causing hemorrhaging and they're merely asking for donor blood. We need to cure the disease, not just give them more to bleed. If a bailout is going to happen it needs to come with a laundry list of conditions including new business models and a new team of executives that understand what these morons clearly do not.

What in the world is right about these idiots retaining millions after the company goes under while their employees have to wonder how they're going to pay the mortgage?

Am I the only one who thinks that having the power of an executive in a company means you earn those giant paychecks by shouldering the responsibility as well?

If we were in Japan, these execs would have committed seppuku by now and been replaced. Why are we considering giving them more of our tax money to mis-manage? These guys should be on the boot end of a civil suit if you ask me.

** Comments Closed on this Post **

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