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Wednesday, 19 November, 2008 11:55 PM
Automotive News: The Cost
of GM's Death
PHOTO
BY JASON RZUCIDLO / ©AMERICAJR.com
The
Renaissance Center is home to the General Motors World Headquarters.
DETROIT
-- The following is being issued by
Automotive News:
If Congress
thinks a bailout of General Motors is expensive, it should
consider the cost of a GM failure.
Let's be
clear. The alternative to government cash for GM is not a
dreamy Chapter 11 filing, a reorganization that puts dealers and
the UAW
in their place, ensuring future success.
No, even
if GM could get debtor-in-possession financing to keep the
lights on (which it can't), Chapter 11 means a collapse of sales
and a
spiral into a Chapter 7 liquidation.
GM's 100,000
American jobs will die. Health care for a million Americans
will be lost or at risk. Hundreds of GM's 1,300 suppliers will die.
Their collapse could take down Ford Motor Co. and Chrysler LLC,
perhaps
even North American transplants. Dealers in every county of America
will
close.
The government
will face greater unemployment, more Americans without
health insurance and greater pension liabilities.
Criticize
Detroit 3 executives all you want. But the issue today is not
whether GM should have closed Buick years ago, been tougher with
the UAW
or supported higher fuel economy standards.
In the next
two to four months, GM will run out of cash and turn out the
lights. Only government money can prevent that. Every other alternative
is fantasy.
The $25
billion in loans that Congress approved to partially fund
improvements in fuel economy? Irrelevant. Dead automakers do not
invest
in technology.
The collapse
of the global financial system has crushed the American car
market, dried up revenues for the Detroit 3 and highlighted their
weaknesses.
Each of
the Detroit 3 is in crisis. But Ford, which borrowed big two
years ago and thus has more cash today, may skip a bailout and the
strings attached. Cerberus, which bought Chrysler last year, doesn't
deserve money. Government cash might help sell Chrysler to a strategic
owner.
Some Detroit
critics want their pound of flesh: Throw the bums out and
install a government czar. Treasury Secretary Henry Paulson won't
use
any of his $700 billion bank bailout money to help manufacturers.
In any
case, he'd need a guarantee that a bailout would make Detroit "viable."
Well, nobody
-- not even AIG -- is insuring guarantees for viability.
The taxpayer
needs protection and an upside. GM's top management may
need to go. Government-as-shareholder deserves a big voice. Those
details can be worked out.
The Detroit
3 CEOs and UAW President Ron Gettelfinger had better tell
two critical congressional hearings next week what sacrifices they
are
prepared to make.
But the
stark fact remains: Absent a bailout, GM dies, and with it much
of manufacturing in America. Congress needs to do the right thing
--
now.
Founded
in 1925, Automotive News is the newspaper of the automotive
industry. The tabloid newsweekly and its web site, autonews.com,
is
read by North American car and truck manufacturers, their franchised
dealers, and original-equipment suppliers. It is published by Crain
Communications Inc.
Source:
Automotive News
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