The Bailout of the Big 3 Auto Makers Has Been One of the Hottest Topics in Washington, DC Over the Last Several Days

As you know, the top executives of General Motors, Ford, and Chrysler drove cars to Washington this time as opposed to flying their corporate jets.

The executives made their second pitch to Congress begging for money to save their companies. Each stated that they were willing to work for annual pay of $1. In general, they made a better showing in their testimony but probably not good enough.

They are now asking for $34 billion rather than the $25 billion requested a couple of weeks ago. Testimony by a consultant (who was in favor of the bailout) to the automotive industry stated that the industry would need at least $125 billion.

As I write this article, Congress is working on some kind of $15 billion short term bailout package that will help the auto makers get through the next few weeks. This is not seen as a long term solution.

This weekend I watched Tom Brokaw’s interview on Meet the Press with President-Elect Barach Obama. Obama said some things that were encouraging. He said other things that were of concern to me.

First of all, he said that he wanted any bailout package to be one that resulted in a viable United States automobile industry from that point forward. He doesn’t want the auto makers coming back to Congress in a few months asking for more money. I certainly agree with that and I think that most people do.

When asked about some kind of government backed bankruptcy, he seemed to imply that he was against that. He seemed to imply that he did not want any auto workers to lose their jobs.

This is a concern to me. First, let me say that I don’t want anybody to lose their job, whether in the auto or other industries. I know the difficulty of going through a job loss.

I have been laid off from my job before. I know how much pain and misery is involved in that experience. If I had been the only one affected, that would be one thing. But I had a wife and two children to support. They were depending on me financially. I saw the hurt and fear in my wife’s eyes. It was a horrible feeling seeing that.

Here is my Humble Opinion

I don’t care if these executives rode in their corporate jets, drove their cars, or walked to Washington. Sure, I know it was a symbolic gesture on their part to drive. To me, it’s only peanuts in the scheme of things.

I also don’t care that much about their offering to receive $1 annual salary. Again, it was a good symbolic gesture on their part. But again, it only amounts to peanuts.

I want there to be an auto industry in the United States. I agree with Obama. At the end of all this, I want an auto industry that is viable – one that is competitive with the foreign auto makers. I want an industry that operates in a responsible and efficient manner.

My concern is that Obama and the Democratic Congress for 2009 received so many contributions from unions in general and the United Auto Workers Union in their election campaigns. They will be very reluctant to step on the UAW’s toes and require the changes necessary in the union contracts to make the U.S. auto industry competitive.

I hope I am wrong on this. If I am, I will have far more respect for Mr. Obama and the Democratic Congress.

In my opinion, the only way for this industry to be viable going forward is for there to be major concessions on the part of the UAW. The union has offered the postponement of the creation of a Health Care Trust and the suspension of the Jobs Bank for laid-off workers. This Jobs Bank pays employees laid off due to plant closings 85% of their wages and benefits for not working.

The only way for the industry to be competitive is through major revisions of union contracts. Obama seems very reluctant to push for anything on this scale.

I also don’t agree with the auto maker executives who continue to point out the major impact of job losses on the U.S. economy if they don’t get a bailout. I don’t want to see anyone lose their jobs. The loss of major jobs on a major scale would be devastating for the economy.

But if we end up with 3 companies where everyone keeps their jobs and the union wage and benefits contracts stay in effect, the auto makers will be back time and time again asking for more money. And we will never have a industry that is competitive.

It is simply not fair for the U.S taxpayer who has an hourly wage (if they are working) averaging $18.50 per hour pay for the auto workers who average $28.50 in wages. There must be major concessions from all sides.

With major concessions by all parties and reduction in legacy costs, there must be a way for the industry to maintain a fairly high percentage of employees and be competitive against foreign companies. If this is not accomplished, I feel we are just throwing good money after bad.

I also don’t agree with those who say that it is only our current economic situation that is dragging the U.S. auto makers down. This industry has been failing for many years. Sure, the economic climate has made the situation worse. But it is not the only reason why they are in such bad financial shape.

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This brings me to my final point. Many, many companies are in trouble financially. You may have already lost your job. Or you may be feeling insecure about your employment.

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Scott Hubbard has retired from 25 years as a Chief Financial Officer in Corporate America. He now enjoys teaching corporate professionals and network marketers how to apply attraction marketing online and how to generate free qualified MLM leads on the internet. 

He is happy to give a free consultation for those having a serious interest in being an entrepreneur.  You can reach him toll-free at 877-878-4036 or by email at Scott.Hubbard3@gmail.com.  You can learn more about Scott by going to his blog at http://www.YourGuideToRetirement.com.