Posted by: David Welch on November 5, 2008
My colleague David Kiley raises some very good questions for Detroit’s heads of state and some veteran industry watchers. While I think a bailout for the industry is needed and would cost far less than the banking bailout did, there are some questions that must be answered. Here are a few more things that the taxpayers who would foot the bill might like to know to weigh the pros and cons:
For General Motors Chairman Rick Wagoner: If some chunk of government funding might grease the wheels for your acquisition of Chrysler, how many jobs would be lost?
What is your plan for making a strong business out of Chrysler?
Why would taxpayers want to fund a deal that might cut tens of thousands of jobs?
For that matter, how would a GM acquisition of Chrysler help the U.S. auto industry?
How can a deal be structured to make sure taxpayers get a return on this assistance program?
For Cerberus (Chrysler’s owner) Chairman Stephen Feinberg: If your company sells Chrysler to GM thanks to Federal assistance, would you be willing to do a deal that accepts a lower value for Chrysler than you paid?
After all, if taxpayers are going to help the industry and perhaps even take a stake in a combined GM-Chrysler, why should they pay for Chrysler what Cerberus paid when the company’s fortunes and, hence, its value, have declined?
For Sean McAlinden, chief economist at the Center for Automotive Research: Could you please explain the economic cost of letting one or more Detroit companies fail?
What would that do to the U.S. manufacturing base and the trade imbalance?
For Wagoner, Ford CEO Alan Mulally, Chrysler CEO Robert Nardelli and UAW President Ron Gettelfinger: Would all of the interested parties—executives, white collar workers and union members—take a pay cut as Chrysler employees did when the government helped the company out with loan guarantees in 1979?