The U.S. auto makers are broken. They were broken by the unions that controlled them for the last 40 years. GM pays pension and healthcare benefits to more retirees than to active employees!
Do you know that when trying to push through process improvements, the U.S. automakers need formal approval from the UAW? Think about this, they need to ASK the unions if they can improve the way they manufacture automobiles. It’s absolutely crazy.
Here’s another fact for you. Number of GM dealerships in the U.S.: 6,000. Toyota dealerships: 1,500. The dealer network must be pruned. GM has tried to do this, but is continually challenged in court because of archaic state laws that force GM to continue supplying failing dealerships.
I agree with Romney, the industry needs a major reorganization and throwing $25bn at the problem will not fix it. This will become a major sink hole and before we know it, the federal government will be up to $50 or $100 billion and the “Big 3” will be in no better shape than they were.
Remember, bankruptcy doesn’t necessarily mean that these companies cease to exist. It just means that they get a chance to restructure the way they operate and to equitize much of their debt. Politicians are too fearful to allow something like this to happen though. The heavy handed Democrats are too indebted to the unions and the result will be a broken industry remaining broken for years to come.