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Termyn8or -> RE: Obama Team Said to Explore `Prepack' Auto Bankruptcy (11/23/2008 12:08:53 PM)
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``The difficulty is assuring the American people that the bailout money won't simply defer the company's failure for six to 12 months,'' Bienenstock said.
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The difficulty is in convincing ME. First of all I don't remember exactly who but a few on this board have been discussing "Rewarding failure" quite a bit. I think we need new blood in there. These people should have been fired.
The first couple of things that need to be done is to get out of the retirement business and make some changes in production methods. If I am the employer I will tell the unions to get a new contract ready, because we no longer offer retirement. This should be industry wide. GM did not agree to deal with retirement because they thought they were going to lose money, in fact they made money for some time doing it. But now I say prohibit them from doing it.
Instead offer the tax defferred option to establish an account. The worker decides what to invest in and what not to invest in. The companies are insulated. When retiree benefits exceed the cost of steel in a new car something must be done, it is that simple.
I think GM would have been able to weather this storm just fine if they had not decided to be an investment firm, bank and broker. Stick to building cars. For many years IMO GMs were the best US built cars. They were selling cars with efficient MPFI systems and sophisticated and reliable engine control which made them more efficient while the other big two still used distributors and carberators. They had independent four wheel suspension and even roller cams on cars you would never think would have these features. That's why everything in my driveway was built by GM.
But those are older, we are talking new here, and things are changing.
Looking at the bigger picture though, all in all these auto makers must deliver more reliable cars and expect to sell fewer. Buying a new car every year and just melting the old ones down costs money. We don't have it. Therefore an overall reduction of scale of operations is in order, but so be it. If you make cars that people will buy, sell them and support them well with good service and parts, and stay out of the banking and investment business, you can hold up through some tough times. But because of their folly in trying to be an investment firm, they made a vital industry vulnerable.
Just stop doing that and we should be OK.
T
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