11.12.2008

What to do about autos?

Comment: 3 views:


  1. Let 'em fail to "restore realistic, competitive, market wages to the industry"
  2. Nationalization
  3. Tax incentives on all new-car sales


View # 1: Let 'em fail

Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?

Excerpt:

Should U.S. taxpayers really be providing billions of dollars to bailout companies (GM (GM), Ford (F) and Chrysler) that compensate their workers 52.5% more than the market (assuming Toyota wages and benefits are market), 54% more than management and professional workers, 132% more than the average manufacturing wage, and 157% more than the average compensation of all American workers?

Maybe the country would be better off in the long run if we let the Big Three fail, and in the process break the UAW labor monopoly, and then let Toyota, Honda (HMC) and Volkswagen (VLKAY.PK) take over the U.S. auto industry, and restore realistic, competitive, market wages to the industry. It might be the best long-run solution.


View # 2: "Nationalization"

A Radical Solution for U.S. Auto Makers

Excerpt:

Automakers want a bail out because they’re burning cash at phenomenal rates, but they have no meaningful plans for how, exactly, they’re going to turn things around. What good is a bailout if there is absolutely no opportunity for a turnaround? Detroit will never compete with foreign owned manufacturers. They simply do it better, faster, and cheaper. There is no way Detroit can shed its ugly legacy of high costs, slow market response and white-collar fat. Let’s admit that.

On the other side of the coin, there is strong, albeit idealistic, talk about creating an energy-independent America and weaning ourselves from fossil fuels. Rather than debate about the future of the Big Three, let’s look at this situation from a radical perspective. Well, as radical as capitalism, with a kick in the pants from the government. Which, in case any of us have forgotten, is representative of the people, by the people and for the people. So here’s a “peoplespeak” solution.

...

So here’s the plan: implement a plan that virtually nationalizes the US auto industry. If everyone is talking about bailing out US automakers because they’re a “can’t fail,” we’re already talking about virtual nationalization. We’re looking at an outdated, uncompetitive industry with high costs and an unbelievably slow to market response time. So if the US were to provide billions to the auto industry to prop it up, what new value proposition would we actually have? The same old companies, doing the same old thing, and when all is said and done, they would still not be able to muster a cost-effective, high quality alternative to their competitors.



Comment: I'm sure there are other ones. I don't like "nationalization". The first seems, ah hum, a little harsh. Pouring billions into these industries without radical restructuring makes no sense however. Another idea below:

Senator calls for tax incentives on all new-car sales

Senator Barbara Mikulski of Maryland thinks that the economic panic can be partially abated by allowing buyers of new vehicles to deduct auto loan interest, fees, and sales tax related to the purchase of a new car from their income tax. The proposed initiative would run from now through the end of 2009, and is only for families earning less than $250,000, or individuals making $125,000.

1 comment:

  1. Nationalization - no way. However bad private companies can do it, government can do it worse.

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