Around Independence Day 2005 I purchased a new Chevy Malibu. Its such a nice car that General Motors now wants me to buy another, except they wont give me the car. They, along with Ford and Chrysler want my money, but have nothing to offer in return.
Welcome to the great American Automobile Bailout. The big three American auto makers flew into Washington, D.C. via private jets, obviously learning nothing from the piggish largesse demonstrated by AIG hats in hand begging Congress for a $25-billion loan.
Remembering Nancy Reagans anti-drug mantra, advice to Congress, Just say no. First the banking industry, now the automobile industry. Where does it end? Whos next? Textile workers? The newspaper industry? Their failings are on them for the pulp fiction the alleged mainstream media disguises as journalism. As Harry Truman so eloquently noted on his Oval Office desk, The buck stops here, and here is the American taxpayers who are the providers of the money Congress would loan the big three.
Bailout supporters deem it necessary to protect the auto industry from bankruptcy and eventual loss of business eliminating over one million jobs related to the auto industry. Congressman Barney Frank (D-MA) never meet a bailout he didnt like starting with $700 billion and the $100 billion showered upon the AIG weasels who continued living high off the hog on the backs of the taxpayers while executives enjoyed cushy massages. If Frank supports it, it must be wrong. When the Democratic-lead Congress approved the initial $700 billion bailout the stock market continued plummeting toward the abyss.
Conversely, Congressman Elijah Cummings (D-MD) correctly demanded AIGs CEO Edward Liddys resignation as condition of the bailout. Why retain leadership that continues running the ship aground? Perhaps its time GMs G. Richard Wagoner, Jr., Fords Alan Mulally and Chryslers Robert Nardelli, the Larry, Moe and Curly of CEOs, were left at the side of the road.
The automobile industry is responsible for their failings. They are either not producing vehicles Americans want or the cost is prohibitive. Why is the cost prohibitive? The labor costs of the big three is $73-$74 per hour. The labor cost of the American worker outside the big three is $28-$29 per hour. Japanese auto worker labor cost is about $45 an hour.
If the big three face Chapter 11 they would be forced to reorganize in a fiscally prudent manner. Reorganization should include civilians advising the big three how to drive customers back into showrooms.
My first car was a 1973 Delta 88 Oldsmobile a behemoth of a car that had crank windows, AM-only radio and took regular leaded gasoline. Oldsmobile has gone the way of the dinosaur and America survived. If GM, Ford or Chrysler faded away, merged or streamlined, they could again be the strong, solid American automobile manufacturer from yesteryear. A thinning of the herd strengthens the herd.
Former Massachusetts Governor Mitt Romney (R), a Michigan native against the bailout suggests bankruptcy is appropriate. Why should taxpayers pay for something they didnt want in the first place? Romneys father George headed up American Motors starting in 1954. Anyone miss American Motors? They entered this world on a merger between Nash-Kelvinator Corporation and Hudson Motor Car Company in 1954. They merged with Renault in the 1970s and disappeared when Chrysler bought out AMC. (Renault produced the hideous Le Car in the 70s. What a piece of crap.)
If bankruptcy shakes loose the cobwebs giving people something worth buying at a price worth paying, consumers will return. If the big three cant make it on their own, it wasnt meant to be.
When the Dow Jones Industrial Average, first published on May 26, 1896 in Customers Afternoon Letter, the original Dow Industrials featured 12 companies. In 1916 the Dow expanded to 20 companies and 30 in 1928 the number used today. Of the original 12, General Electric is the last man standing.
What happened to the U.S. Leather Company? Dissolved in 1952. North American Company? Broken up in the 40s. National Lead Company? Today they are NL Industries, but tossed off the Dow in 1916. The American Sugar Company? Today, they are Domino Foods, Inc. sugar, not pizza. Companies come; companies go.
What about the original Dow 30? Chrysler and GM still stand, but did the country fold when Bethlehem Steel, founded in 1857, bankrupt in 2001 and dissolved two years later? No; other businesses pick up the pace. Anyone miss Woolworth? OK, it was an American institution, but now theres Wal-Mart. Potsum Inc. became General Foods. American Can became Primerica. Standard Oil of New Jersey became Exxon. Texas Corp. became Texaco, currently Chevron. In business there are no sacred cows.
It may not be necessary to reinvent the wheel, but reinventing the American automobile industry sure seems prudent.
Sanford D. Horn is a writer and political consultant living in Alexandria.