Should the government help out General Motors, Ford and Chrysler? The short answer: Yes. Now for the long answer -- why I think we should help and what I think we should do.
Why we should help out
1. The domestics deserve to survive.
Twenty years ago, the bulk of American cars weren't much to write home about -- but a lot has changed. GM is a great example. The last three years have been a renaissance, and I can proudly (and truthfully) say that I'd buy a Cadillac CTS-V over a Lexus IS-F or a GMC Acadia over a Honda Pilot in a heartbeat. Chrysler's most recent products haven't fared well on this site, but we can blame that on the direction set by Daimler. Remember, Chrysler designed some of the best-driving front-wheel-drive cars of the '90s (Neon, Intrepid), so we know the talent is there. Ford's having a bit of a dry spell, but with Mulally in the driver's seat and some good products (2010 Fusion/Milan, Fiesta) and new-technology engines on the way, I think they have a bright future.
People blame the domestic automakers for focusing their efforts on SUVs (which are more profitable than cars), but are they really the only guilty parties? Bear in mind that of the 16 vehicles Toyota sells in the US, only seven are cars -- the rest are SUVs, pickups and vans.
2. We bear some responsibility.
The government bears some responsibility for where the Big Three are now, thanks to the mandate of 35 MPG corporate average fuel economy (CAFE) by 2020. Don't get me wrong, CAFE is a good thing. But unless American buyers suddenly develop a taste for subcompact cars as family transportation -- which, I guarantee you, we won't -- higher CAFE is going to cost money.
3. It's worked before.
In 1979, the US government guaranteed $1.5 billion in loans to Chrysler (the actual financing was private). Chrysler turned themselves around and paid the loans back early. And while the first few post-loan years were filled with unimaginative products, Chrysler went on to develop some of the best vehicles they'd ever produced.
4. Doing nothing is a bad idea.
The Big Three put supper on a lot of tables every night. If any one of them go under, the resulting unemployment is going to give this country a serious kick in the ribs -- not a good thing when we're already down. If GM, Ford and Chrysler are hurting, the rest of the country -- as well as a lot of people in Canada and Mexico -- are going to get hurt, too.
How we should help out
Loans, not handouts
Keep in mind that the "bailout" the government is considering would come in the form of loans. I don't think the government should just hand over taxpayer money -- not unless the taxpayers become part-owners. (Not such a bad idea -- government intervention and ownership helped turn Renault around.)
What about oversight?
Normally, I'd say the automakers will know what to do with the money -- though the fact that the three CEOs flew from Detroit to Washington in three separate corporate jets makes me question their judgment. (Why didn't they drive? They could have carpooled in a 1978 AMC Concord and said "See what happens when you don't help out?")
If any of the Big Three declared bankruptcy, they would have to reorganize (and would hopefully be able to keep their doors open). I think it's fair that any government loans come with similar strings attached. If we, the taxpayers, are going to loan the money -- or guarantee loans from private sources -- we have a right to know how the companies plan to repay us. That said, the car business is complex, and as past experience with mandated zero-emissions vehicles has shown, letting the government make product-planning decisions isn't the best idea. If the government orders the domestics to pull the plug on leather-lined pickups and 400 horsepower sedans and instead concentrate on fuel-efficient five-door hybrid hatchbacks, business is going to dry up faster than... well, than it's drying up now.
That said, the government (and the taxpayers) need to understand the glacial pace of the auto industry. Developing a car is a long and very expensive process. Government funds aren't going to make the Chevrolet Volt appear in dealerships tomorrow -- but they could help ensure that the Big Three stay afloat long enough for the Volt and other new products to make it to dealerships in 2010.
I say, let's hear their plans, let's hear how the money will be spent ($500 million to develop a new direct-injection 4-cylinder engine? Fine. $1 million to redecorate the Fokker 70? No.) and then let's loan them the money and let them do their thing. If things are going well and they are making the payments, then leave 'em be. If they aren't, they need to come back to Washington (by car!) to explain why.
Meddle with labor
Having the government get involved in labor issues might not be such a bad idea. The stranglehold the UAW has on the automakers is a big part of their problem. I'm as pro-union as they come, but I think the UAW is putting self-preservation over the interests of its members. It is in their best interest to foster the "labor vs. management" mentality -- and how the heck can you build good products if labor and management see each other as enemies? No wonder the domestics are shifting production to Mexico. Toyota, Honda, Hyundai and other foreign companies build cars in the US without the intervention of the UAW. Quality is excellent and, so far as I know, the people who work on the line aren't starving. Maybe that's something we need to look into a little closer, because goodness knows we could use the jobs here in the US.
Bottom line
Loan the money to GM, Ford and maybe Chrysler. (I'm on the fence about Chrysler. Owner Cerberus has deep pockets; if they have faith in the business, why are they asking for our money rather than using their own?) Let them tell us how they plan to use it. Make reorganization a key part of the funding package. Keep the government out of product planning, but let them get arm-deep in labor relations. The economy is going to turn around, and so is the auto business. I'd really like to see GM, Chrysler and Ford on the other side. Who knows? Maybe someday we'll have a domestic car industry that all Americans can be proud of.-- Aaron Gold
