Wednesday, November 19, 2008

Should We Bail Out the Auto Industry?

I suspect that many people don't really appreciate the dire straits that an implosion in the auto industry would least, judging from the debate going on in Washington. But I think the biggest problem is that everyone is confused over (a) the scale of the problem, and (b) the constant juggling that's going on with federal money. I think the biggest worry is that funneling money to the car companies will only be sending good money after bad, unless there are major changes in the way GM & others do business, and right now the focus of the debate is (a) the size of the bailout, and (b) comparisons to all the OTHER bailouts afoot. Lost in the discussion seems to be how to restructure the care companies...and the magnitude of the fallout, if GM goes down. Perhaps we're a bit biased, being from Michigan (which would be at ground zero), but I don't get the sense the decision-makers realize just how many other industries and businesses would be affected.

I suspect that if the focus of the debate starts turning to a discussion of facilitating changes in the way the car companies do business in the future, rather than an argument about how much money they want, things might start moving in a more productive direction.

In addition...I suspect that the auto exec's and union officials should either (a) take a course in public relations, or (b) learn to keep their mouths shut. I don't think the people they're asking to rescue them need to hear much besides, "Of course, our management salaries will be slashed to the bone...and any bonuses are out of the question for the foreseeable future," and "Of course, the Union stands ready to do whatever it takes to make the industry competitive again." It sounds like they should all go back and read everything they can find about Iacocca's adventures 30 years ago as head of Chrysler during its darkest days: as I recall, the success of the venture depened upon (a) his personal willingness (well...the perception of his willingness) to share the privations that were coming; (b) his ability to convince others that the rough times ahead would lead to something better, if everyone pitched in and helped; and (c) a certain ruthlessness in execution. I don't see similar leadership ANY of the industries with their hands out.

Speaking of the subject of Chrysler...I remember one W. Martin Makinen saying, about that time, that the biggest danger from the original Chrysler bailout might not be that it would fail, but that it would succeed. I sometimes wonder what would have happened if we'd let Chysler go belly up...and whether that would have just led to a deeper recession back in the late 70's, or whether it would have awakened Ford and GM (and the rest of Corporate America, as well), to the very real prospect of their own corporate mortality, if they didn't learn the lesson of the first oil shocks, and adjust.

JEFFREY CAMINSKY, a veteran public prosecutor in Detroit, Michigan, specializes in the appellate practice of criminal law and writes on a wide range of topics. His books include the science fiction adventure novel The Star Dancers, the exciting second volume in the Guardians of Peace-tm series, The Sonnets of William Shakespeare, and the acclaimed Referee’s Survival Guide, a book on soccer officiating. All are published by New Alexandria Press, and are available on Amazon, as well as directly from the publisher.

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