Adding Teeth to a Detroit Bailout

How many meetings over how many years did Congressional leaders like Nancy Pelosi, Henry Waxman, Barbara Boxer, Edward Markey and others go hat in hand to the automakers and beg them to do something to help America, to improve fuel economy, to stop suing the states over clean car initiatives... and were shown the door.

Congress has used its regulatory muscle before to force Detroit to make other improvements to our cars, from seat belts and air bags to catalytic converters, all of which Detroit refused to do voluntarily. Now that the tables are turned and Detroit is doing the begging for a handout to save itself, Congress should demand in return a serious, long-overdue increase in fuel efficiency standards for new cars and trucks.

Just as they did with the Wall Street bailout stipulating an end to golden parachutes for CEOs, Congress should put some real teeth into any bailout negotiations with Detroit.

The Big 3's greed and lack of vision led them to the cliff's edge where they stand today, facing financial implosion unless the federal government swoops in to prop them up. These companies invited their impending destiny, and some have argued they ought to face the consequences of the market without federal intervention. But the fact is that America can't afford to lose the millions of jobs Detroit provides and the opportunity to lead on a manufacturing product that will see explosive foreign sales in the near future, especially in China and India.

So it's time for some tough love. What would you say to your kid who came to you looking for a handout after he or she had been warned repeatedly? Would you fork it over, no questions asked? Is that the life lesson you would pass on to your child? No way.

If Detroit needs more taxpayer bailouts to survive, we ought to demand some serious and real concessions in return, starting with an immediate cease-and-desist order for Detroit to drop its lawsuits against California, Vermont, Rhode Island, New Mexico and any other state that passes clean cars legislation requiring more efficient, less polluting vehicles. Enough already, Detroit. Stop fighting and start building clean cars now.

Congress should set strict guidelines to ensure that Detroit moves as quickly as possible to get clean cars into American driveways where they can help power a new smart grid like the one Al Gore described in Sunday's New York Times. Congress should also open the process beyond the Big 3, offering financial support to smaller entrepreneurial carmakers for large-scale production of their innovative all-electric and plug-in hybrid prototypes which lack financing to move from the concept contests and into dealer showrooms and consumer hands.

It's past time for Detroit to get serious about regaining America's once-proud role as a leader in automotive engineering. Congress must hold the automakers accountable in any bailout to ensure that our clean car 'future' starts now.

Read More:

Should the Government Bail Out the Big U.S. Three Automakers? HuffPost Bloggers Weigh In

Comments

[VikingQuest]

The unions have officially ended any chance of GM success moving forward . . .

Anyone here aware that GM's bill for employees health care and pension benefits in 2007 was $103 BILLION with a B.

Also, $2000 of ever GM car sold goe right to HC & Pensions while Toyota only has a $200 bill.

No company can succeed under those circumstances

[got2Bkidding]

So are you suggesting universal healthcare, to help american makers compete? Or are you suggesting a tariff on Toyota's to offset the cost to the domestic makers?

Either one is a positive step.

[Dystopic]

toyota builds alot of cars here. And Toyota makes a lot more profit per unit, and it's not all labor savings from non unionized workforce.

I do not think that some highschool dropout should be making $29 per hour to build a car.

[flatus]

Put the following two items on a scale and see if you can get them to balance:

1. Limited resources,
2. Unlimited human desire.

To paraphrase Shakespeare through John McCain, "Therein lies the rub, my friends".

[Artos]

What we really need to do is to get away entirely from the notion that we need privately owned vehicles. I suggest everyone have a look at the system they are working on in Britain called Ultra. You can google it and see it on the web. If we built systems somewhat like it here in every community that needed such a system here in America our travel problems would be solved for citywide travel. The only way I would make ours different than the British system is that I would have ours on a third rail method and guided by the rail itself, Not driven inside a concrete track like theirs is. The Automakers could still survive if they were the outfits that built the systems and the vehicles that traveled on them.

[Artos]

First of all I tire of this notion of saving Corporations, because their major reason is they don't want to put all of these workers out of a job. When in hell did our Corporations every give a damn about the employees. They only care when it means saving their own wealthy behinds. I've heard this tripe before from many industries. As soon as they are saved they immediately begin downsizing and calling that good management. The only ones who seem to benefit are the CEOs who get bonuses and the Stock market which sees the resultant "Profit" as a good thing. So we save the Auto makers, then what . They promise to give us better MPG and we do, we get maybe 5 or 6, maybe 9 or 10 more miles, depending on if it's good weather and you're driving downhill all the way. So what. They are even given 2 or 3 years in the bargain to get it done. So what. These people have engines that can get lots more mileage available, they always did, but they don't want us to have them because they work hand in hand with the oil industry. Why after all of their scheming should we be inclined to help them. I say let them eat cake. Tough luck Busters.

[VikingQuest]

"When in hell did our Corporations every give a damn about the employees"

Considering GM alone paid $103 billion for pensions and health care for their employees in 2007 . . . I would say they do.

BTW, enough with the "evil corporation" bit.

[Dystopic]

corporations by definition are anti worker and anti union. It's the nature of the beast.

not all corporations are evil, but the management generally are.

[conneocon]

Big business is learning fast. If you have made bad decisions, manufactured products buyers did not want, made or imported products that were dangerous and harmful, sold machines that guzzled millions of gallons of gasoline and polluted the air we breathe , played poker with high risk mortgages, used hedge funds to drive up stock prices on commodities to the point they were unaffordable, then you qualify for a big government windfall bailout paid by the American taxpayer. You can continue business as usual upon your recovery and continue to weaken the unions, send thousands of jobs out of country, purchase raw materials and piece work from third world providers, and gererally screw your customer as usual.

This is the point at which Congress must act and act definitively! Strong conditions and controls should precondition this money so that the providers, American taxpayers, at least enjoy some sense of appropriateness in this fiasco. These interventions should address all of the horrid business practices in the previous paragraph as well as, upon fiscal recovery , return some of this money back to John Q taxpayer through incentives and price considerations on their new socially created product.

Additionally, until the Big Three have reached fiscal independence, executive, board and stockholder margins should be controlled sharply by a limited percentage of real profit and not the voodoo economics used by so many corporations to show to their board magnificent progress while publicly reporting horrid financial performance. Business cannont go on as usual!!!

[freeUSofcorp]

Life is about change. That word did not start with Obama, it has been around since the beginning of time. The US Auto Companies have worn themselves out by bullying us. They have repeatedly sued those that want to make the earth cleaner and safer. They convince us through advertising that we need these gas guzzling vehicles. They have not sacrificed at all for their workers. Now things are finally not working out for them and we are thinking about bailing them. We should be saying Thank God, Finally!! I hear the part about the autoworkers being out of work but that is the perfect time to bring in subsides for new large business’s that develop clean energy. Let this be where our tax dollars go. DO NOT USE TAX DOLLARS TO HELP THE AUTO COMPANIES! It’s time for a change the country can rely on in the future: Clean Energy.

[dshwa]

I posted my wish list a few days ago on the GM out of cash article:

1) MPG standards. GM gets the money, but all their cars have to meet better mpg standards by say, 2012. Modernizing their plants to meet that goal would require American jobs making the required parts and doing the rebuilding, stimulating the economy.

2) Limits on downsizing and outsourcing. GM cannot layoff or move overseas more than 1% of their current American workforce within the next 10 years. You get the American taxpayer's money, you protect the American taxpayer's jobs. Period.

3) Caps on executive salaries. Maximum executive severance pay is zero dollars. You bankrupted your company, we're not paying you to go away. We are giving you money because you ran your company into the ground, no golden parachutes for you. Maximum yearly pay including bonuses, stock options, health plan, etc. is 100 times what the lowest paid U.S. employee in your company makes in a year (including bonuses and healthplans, etc.). That's still about 1.5 million annually. You want to make more, you gotta make sure everybody working for you makes more. Their tax dollars are saving your company, so you owe them.

[Chavez08]

Ms. David,

This article really shows how out of touch with America some bloggers are.

Although I am in total agreement regarding the strategic direction regarding the Big-3 and product development, I think it's important to point out that the neon-elephant in the room is still the outsourcing of American manufactuiring jobs.

This economic crisis wasn't caused exclusively by misguided market formulas or macroeconomic details, it was caused by mostly by the destruction of the working-class in this country. The automotive industry, indirectly, supported almost every other industry in this country, including the Entertainment Industry.

That being said; Let's first reverse these bad trade deals that only benefits China and Republican cronies, bring jobs back to America THEN we can take the auto industry green on the fast-track.

Shifting gears; - What do you propose to do about Asia's pollution contribution?

[veepveep]

You do realize that Toyota, BMW, Mercedes, Kia, and Volkswagen (planned) have all opened up plants that have brought thousands of jobs to the US. If outsourcing was the issue, why would these companies all open plants in the US? The issue is unions in the subject case is unions and the fact the average pay is $73.20 per hour at the big 3 compared to $48 at Toyota.

[got2Bkidding]

They brought manufacturing facilities into the country because of the tariffs placed on them in the 70's. They place all of these facilities in "right to work" states. By avoiding collective bargaining they provide lower wages, fewer benefits and less security than unionized positions.

As a result, even unionized jobs now pay less than before. It's a supply and demand thing.

Now that through NAFTA they have even lower wage people available to them, even those jobs are being moved south of the border. At some point we have to do something to keep wages up and jobs at home. Regardles of what you think of unions, and company paid benefits.

[jkfl]

Bailing out the big three big car manufactures is a huge mistake. The have failed to be innovative and successful. We will be throwing our money away. Let capitalism work like it is supposed to work. If a business can't be competitive let it fail. Detroit has been out of touch for a long time. How is giving them more money going to help.

[lunadove]

I'm angry about it as well, unfortunately the millions of workers who rely on these companies will be another burden on the economy in a multitude of ways.
Giving them a fed loan with many stipulations could help if done right.
It is frustrating that the people who run these companies suffer little, and the many who rely on them are wondering if they will have jobs for the holiday season and new year, my family included.
Trusting these people who have been so greedy and so unavailable to progress leaves little to hope.
My own family relies on these companies. but I would not want these companies to run status quo and benefit from a handout unless it was to be paid with interest and with set regulations.

We would all benefit if they made better forward-thinking products that were an accessible price range for most people.

[tomhuggan]

It's very possible for American auto companies to come back. A little govt. help is in order, a lot of govt. interference is mandatory. Sounds bad, but the truth is that the roads are public, and the cars on the road should be designed for the benefit of the public, not just the buyer.

I think though that the domestic auto makers could secure a large niche of the market by making big, but light, vehicles. Some sort of "loan" on the vehicle made of aluminum could be that the maker buys back the vehicle at the "cost" of the raw metal, plus some interest. So if it costs an additional $500 to make an Expedition out of aluminum, then that scrap value would be automatic plus maybe 2% per year, if it was returned to the manufacturer. This would obviously be transferable, but the idea is that the maker gets their real world experienced vehicle back, the metal gets recycled, and fuel is saved all along.

If I were in charge of a auto manufacturing facility, I would prevent people from doing the same job for more than 5 years. Mandatory retraining, with the most physical jobs going to the youngest workers. I would give raises based on good health. And I would not make more that 7 to 8 times the worker's wage. Something similar to what the Japanese do.

[Artos]

tomhuggan,

Most vehicles today are made out of tinfoil so what else is new. I'll go you one better, why not make cars out of recycled paper with a thin veneer of laminated wood, the engine made out of heat tempered Plastic and the bumpers out of rubber. If people knew that they were driving paper thin death traps maybe then they'd be apt to drive safely. Especially if it started blowing apart the faster you went. At seventy miles per you would be sitting on nothing but a chasis.

[osovolante]

That is not an entirely true argument - just watch:

http://www.youtube.com/watch?v=qBDyeWofcLY

Technology trumps mass.

[LucusT]

The prospect of loosing the auto industry in this country should at the very least cause some serious concern. Now, they are looking for a bail out/need to re tool their factories. It will not be possiable to just "loan/give" assistance to them because they have a track record of doing the wrong things. It will probably become necessary to provide some assistance, the following I feel are some things to consider if they get a bail out:
1. FORCE the 3 auto companies to collectively design automotive platforms that are standard across the board for compact, sub compact and mid sized cars. The premise is that if they all build the same engine, drive train, suspension and chassis they will be able to save alot of money just thru the economy of scale. The bonus would be cheaper over all cost of design and production as well as future cost of repair.
They would be free to have any body style, interior finish they want to promote their own brand.
2. Build a flexible design platform that can be adapted to future changes without needing to redesign the entire car every few years.
3. Without saying there must be MPG goals that are to be met from day one and than a progressive increase on the MPG going forward.
4. The new vehicle must be a hybrid design in order to shift the public paradigm toward this type of automobile.
OR NOTHING AT ALL

[qtpi410]

Bravo. Well said. Our family owns two hybrids. And at the time we bought them we got a tax credit.
The Big 3 Unions will also have to make consessions. If I was an auto worker, I would have to say to myself do I want a job a no job.
Sure everybody wants what is fair but life is not fair and in these times the union may have to give up some of its demands.
Just think if the country had some type of universal health care the union might not have to bargain for health care in contract negotations.
Back to tax credit for Hybrids, the tax credit we got was only for a couple years. Anyone owning a Hybrid should get a continuing tax credit.

[0emissions]

Just as I was about to lauch my class action lawsuit against these auto manufacturing companies for all the ruin they have caused to our world, the loss of lives,injuries,and the excessive infrastructure costs to support them: roads,police surveillan­ce,hospita­l care,funer­als,crime,­noise and stress.... they say they have no money??

[tomhuggan]

they tend to produce what the public wants. Big brother can help us in benign ways. It doesn't have to be "my way or the highway". Well, actually yes it does. Size of vehicle doesn't have to be restricted, but weight does. Americans love big cars. Make them light and fuel efficient, tax the heck out of them if they aren't, and see what happens. I suggest DME as the fuel of choice. And that's something Detroit and Washington can make happen together.

[Nooneyouknow]

No, they tend to produce what Congress and the regulators have been lobbied to allow them to produce. These are vehicles that are not designed to be the best possible vehicles; they're designed to maximize profits for the auto industry, its subsidiary industries, the oil companies, etc. The corporate culture of the car makers is corrupt, and a bailout won't change that.

[noneIn2008]

So the key factor for a business success will be the quality of your lobbyist to get free taxpayer dollars. Not your product nor serving consumers. Fannie Mae and Freddie Mac have shown this works. The new business model will be hiring multi million dollar lobbyist. Well, maybe not so new, but the model will be used by more businesses.

[noneIn2008]

Let them die. The cars are poor quality and over priced. Better cars are now made in the Southern USA.

My kool-aid stand needs a bailout. I try to sell hot watered down $10 kool-aid in one flavor, from a stand in my back yard, but I run a union stand. Even though people don't want my product, with more of your money, I could employ more kids in the neighborhood.