News Intelligence Analysis



[Yurica Report editor's note: the underlined emphasis was added by us. Compare the October 29th, 2008 Yurica Report "Save GM and Save the World."]


From the New York Times

November 15, 2008

Saving Detroit From Itself


We have seen a lot of posturing, but we haven’t heard a lot of sense in the debate over whether the government should spend even more to bail out Detroit’s foundering automakers.

Senator Richard Shelby, a Republican of Alabama, is wrong when he says that the troubles of the Big Three are “not a national problem.” The Detroit companies support nearly 250,000 workers and more than a million retirees and dependents, as well as millions of workers at part makers and dealerships. A messy bankruptcy filing by any of the big car companies, in the midst of this recession, would likely cost the government and the economy more than trying to keep them afloat.

At the same time, Congressional Democrats and President-elect Barack Obama, who are pushing for many billions worth of emergency aid for the nation’s least-competent carmakers, must ensure that tough conditions are attached to any rescue package. If not, the money will surely be wasted.

This goes beyond firing top management, forbidding the payment of dividends to stockholders and putting limits on executive pay — all necessary steps. The government should insist on a complete restructuring of any company it pours billions of public funds into.

All three car companies have been hamstrung by the legacy costs of providing pensions and health care to hundreds of thousands of retirees. But Detroit’s problems are mostly of its own making.

The automakers hitched their fate to gas-guzzling trucks, and they obstinately refused to acknowledge that oil is a finite resource and that burning it limitlessly is harming the planet. They lobbied strenuously against tighter fuel-efficiency standards. That wrongheadedness did them in as gas prices spiked and consumers flocked to energy-efficient cars made by Toyota and Honda.

It makes no sense at all to give these companies billions just so they can struggle on for a few more months down this disastrous path.

Before it approves any bailout package, Congress must insist that any company receiving government money must commit to a specific plan to improve energy efficiency. The average fuel efficiency of the American auto fleet peaked at 25.9 miles per gallon in 1987 and then leveled off as gas prices fell and the automakers churned out more sport-utility vehicles and pickups.

Last year, Detroit managed to extract a promise of $25 billion in subsidized loans from Congress in exchange for a new target of 35 m.p.g. by 2020. But the industry can do better. If Detroit were willing to make smaller cars, as European companies do, it could probably achieve a fleet-wide average of 50 m.p.g. by 2020.

The companies also are struggling under a mountain of debt. And any restructuring would mean that creditors would have to swallow a loss or accept equity — as under a regular bankruptcy filing. Restructuring would likely require more plant closures and layoffs.

Rescued car companies would almost certainly have to re-open labor agreements on pay and benefits. These steps would be painful for many workers. But they also are necessary.

Even then, there is no guarantee that these companies will survive after years of failed management. We are sure they won’t if they don’t make sweeping changes in the way they do business. If Congress is going to take the risk and invest billions more of the taxpayers’ money in the companies, it must insist on those changes.


Copyright 2008 The New York Times Company



Send a letter
to the editor

about this article


Visit our New Directory:
Automotive News


And Read:


"General Motors, Driven to the Brink,"
by Bill Vlasic and Nick Bunkley
October 26, 2008, New York Times


Save GM and Save the World!
October 29, 2008
By Katherine Yurica

There are three ways Americans and the new
administration can help to save the automotive
industry from total collapse. In fact, it will make
America the "hero" of the world! (To paraphrase
a line from the Heroes television series:
"Save the General and save the world!")


More Money for Detroit
A New York Times Editorial
October 31, 2008


Obama Asks Bush to Provide
Help for Automakers
November 11, 2008


Panic in Detroit

This is not your father's Oldsmobile we're rescuing.
Jonathan Cohn, Friday, November 14, 2008


Zapping the Volt

by Jane Hamsher

"Let Detroit Go Bankrupt," says Andrew Sullivan.
With spittle-flecked rage, Charles Krauthammer
writes, "hourly cost of a Big Three worker: $73;
of an American worker for Toyota: $48."


G.M.’s Latest Hope
Is a Plug-In Car

November 22, 2008


Executives at General Motors, the largest and
apparently the most imperiled of the three American
car companies, are using the Volt as the centerpiece
of their case to a skeptical Congress that their
business plan for a turnaround is strong, and that a
federal bailout would be a good investment in G.M.’s future.


Directory of the Articles and Essays
of Katherine Yurica


Strategies, Communication and 
Propanda Techniques



Directory on the Rise of Christian Dominionism



Back to The Yurica Report Home Page

Copyright © 2008 Yurica Report. All rights reserved.