Mitt Romney argues in his op-ed in the New York Times that the best way to save the American auto industry is by allowing General Motors, Ford, and Chrysler to reorganize under a managed bankruptcy. He argues that providing bailout money to these companies would merely prolong the inevitable, while a managed bankruptcy would allow these companies to shed massively anti-competitive labor agreements, pension, and real estate costs. With $2,000 in additional costs per vehicle produced, the American companies are simply not competitive with their foreign counterparts.
Thoughts:
I believe that we need an American auto industry, and that the companies comprising the industry must be able to compete on an equal playing field. We must focus on maintaining jobs at the car companies as well as suppliers. Shareholders and creditors of these companies should not get bailed out, as they placed their bets and lost. It does appear that a managed bankruptcy appears to be an attractive option, as it sends the message that the government intends to support American workers, and that management should not be rewarded for decades of failed strategy.
Update:
Apparently, the big 3 CEOs don’t think their companies are in quite as bad of shape as they’re leading us to believe. That’s the only conclustion I can come to after reading about their private jet travel.
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