I don't think taxpayers should be forced to bail out Ford, Chrysler, and General Motors. They got themselves into their present predicament thanks to poor management, low quality products, aversion to modernization, and too much deference to the powerful United Auto Workers union. Now, does that mean we should allow the Big Three go under? No, that would not be in our best interest. Their demise would create a ripple effect that would likely result in hundreds of thousands of U.S. jobs being lost. Still, I think a little blood-letting is in order for the Big Three at this time.
What the federal government should do is grant them a special form of Chapter 11 bankruptcy which would include some incremental loan guarantees that would ensure that they emerge from it as stronger companies. However, there would be a catch. These three companies – including their boards of directors, stockholders, management, unions, employees, and retirees – would have to agree to some serious restructuring.
Their boards of directors would need to agree to steer their companies in the direction of higher quality and more fuel-efficient vehicles – along with the implementation of measurable goals to gage their progress toward this end. Their stockholders would have to agree to forfeit any dividends for a period of at least five years. All levels of their management, including their CEOs, would have to agree to severe limitations on their salaries and stock options.
Their unions, especially the UAW, would have to agree to a rollback of much of the power and influence they've gained over the years. Their rank-and-file employees would have to agree to cuts in hourly wages and benefits. Retirees would have to concur with similar decreases in pensions and benefits. Those who took early retirement and are still younger than 60 (and are not disabled) would have to accept even deeper cuts in pensions and benefits.
The current dire straits of the Big Three could well turn out to be a blessing in disguise instead of a disaster. It all depends on how our elected representatives in Washington respond. Bailing them out would not be the right thing to do, but allowing them to be hoisted on their own petard is obviously not the answer either. Putting them under a special form of Chapter 11 bankruptcy, as I have suggested, may be the solution. If nothing else, it would bring the days of multi-million-dollar CEOs and $50-an-hour assembly line workers to a close for the U.S. auto industry.
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