See my earlier post on GM. These people had 20 years to move toward the Toyota model. Instead, they caved to ridiculous union demands, didn't fix their opertional gaffs and extorted money out of the supply base until the well dried up.
Now, they want the public to bail them out:
From Investors Business Daily:
Posted 12/5/2005
Industrial Policy: U.S. automakers hope to squeeze their customers a little tighter, but not directly. They want Washington's help, but don't call it a "bailout."
The Washington Post reports that industry officials, such as William C. Ford Jr., chairman of Ford Motor Co., and sympathetic politicians, such as Sen. Carl Levin, Democrat of Michigan, don't want that pejorative attached to their plan.
But a bailout by any other name still smells like one — and the car makers' wish list of proposed federal aid, with a single exception, has a particularly foul odor.
Instead of asking for a series of loan guarantees, like Chrysler got in 1979 and 1980, Detroit is making a number of individual requests. The only one worthy of action is tort reform to keep down health care and litigation costs. The rest should be nonstarters.
They include Ford's better idea of using taxpayers' money to retrain workers and help retrofit old plants. Ford also wants increased subsidies for companies that make parts for hybrids and other fuel-efficient vehicles.
Not to be outdone, General Motors wants favorable treatment in proposed pension reform that will minimize the industry's responsibilities. GM also would like for the government to provide catastrophic health care coverage for retirees and their spouses.
Across the industry is pressure on Washington to persuade Japan to appreciate the yen against the dollar so Japanese carmakers will have to raise sticker prices, and to place limits on imports into the U.S. to offset Japanese barriers on imports.
Several of these ideas constitute a kind of moral hazard, which means they'll shield carmakers from the consequences of their mistakes — by forcing taxpayers and car buyers to pay for them — and increase the risk the behavior behind the trouble will persist.
Sadly, it's only natural for companies and individuals to keep making bad decisions when they believe they won't be held responsible for them. Bailouts are death to the market-based incentives that encourage businesses to do the right thing.
Our carmakers have been making wrong choices for decades that go beyond their inability — or reluctance — to design and build cars that excite. They've been largely unwilling to cut costs, especially when it comes to payrolls and benefits. Unions, and the lawmakers who've helped fix the game on unions' behalf, share the blame. All the while, U.S. carmakers lag behind foreign makers in quality.
Now, yet again, it's time to pay. Two weeks ago, GM announced its plan to close all or a part of 12 plants and cut 30,000 jobs. No. 2 Ford is likely to make a similar announcement next month.
It won't save the car companies from themselves, but reform of the nation's civil justice system, the only reasonable proposal from the industry, is still a worthwhile goal. Runaway litigation is hurting the economy as a whole. It is an unhealthy redistribution of wealth, one that puts innovation and jobs in jeopardy.
Congress needs to address the problem so that the next group coming to Washington to appeal for a bailout is from the trial bar — and not from what remains of America's once-proud automakers.
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