Last weekend, I stopped at my local post office in an attempt to purchase several booklets of holiday stamps.
Now mind you at the busiest time of the year they had the foresight to put exactly one person behind the counter, but when it finally came my turn, the clerk told me the attractive stamps featured on a series of posters adorning the walls were not expected to arrive until mid week.
This came as exactly no surprise to me. Nor should it raise eyebrows with anyone else either. It’s simply emblematic of the government’s ability to run things.
Therefore you can envision the scope of my amusement when I read of the plan to hand the Big Three automakers $15 billion while appointing a federal “Car Czar” to oversee the bridge loans.
Said appointee would oversee the disbursement of the loans to GM and Chrysler – Ford stated that it doesn’t face the same cash crisis — as well as supervise their respective reorganization plans in exchange for the truncated bailout funds. The government also could receive warrants that would entitle it to receive an equity stake in the companies. By my definition that sort of encroaches on nationalizing the auto industry.
The proposal also calls for the Car Czar to outline a series of benchmarks to monitor the companies’ progress in carrying out their restructuring plans.
Now, is there anyone who seriously thinks that $15 billion will last more than, say, three months once it gets in the hands of GM and Chrysler, or that it will even begin to set them on the way to being competitive again?
Let’s face it, the management and coaching personnel of the Detroit Lions could essentially run the companies better than allowing lawmakers such as Nancy Pelosi, Chris Dodd and Harry Reid to dictate what’s best for Detroit. This trio not only couldn’t change a flat tire, if you’ll pardon the pun, they’d be hard pressed to tell you which one it was.
Nor are any of the above-mentioned likely to demand stricter concessions from the UAW aside from the promise of eradicating the “jobs banks” practice where, essentially, employees are paid not to work.
That, coupled with a lavish benefit plan, boosts the cost of manufacturing between $1,500-$2,000 per car compared with foreign competitors such as Honda.
I hope no one is naïve enough to think that the government bailout will end at $15 billion. You can’t reverse failed and outdated business models simply by throwing money at them and having a government employee mind the store.
Look at what happened to our local supply of holiday stamps.
I fear it’s going to be a long cold winter in Michigan.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access