Spinning Their Wheels

An editorial is the Seattle Times on the problems of Ford and GM:

What’s with the carmakers? American labor? Nissan uses American labor. So do Toyota and Honda. If properly managed and set to work on a product the people want to buy, American labor does a fine job.
Health-care costs? Those are a problem for us all.
A depression in the car industry? No, actually not.
The more we learn about the problems of GM and Ford, the more it seems that the problems were of their own making. Wages and benefits too high? Management agreed to the terms.
Now, years after these problems have been made public, when rumors swirl about Chapter 11, the board of directors acts. GM’s board has reduced CEO Rick Wagoner’s cash pay from $2.2 million to $1.1 million, and cut the dividend in half.
Someone should ask: A dividend? Paid out of what? Paying any dividend is like asking an accident victim to donate blood.
Having cut Wagoner’s and the GM shareholders’ pay only in half, the companies now whisper in the ear of Michigan’s congressmen. Though The Wall Street Journal reports that there is no appetite in Washington, D.C., for a direct bailout, one idea is a trade bill that would penalize imports from countries that keep their currencies too low. That spells protectionism.
Another thought, less obviously bad, is some special programfor vehicles that use alternative fuels.
Alternative fuel is a fine idea. We support it. But in this circumstance, an “alternative fuels” bill is almost certain to be a bail-out-GM-and-Ford bill.
If these companies can’t survive as now structured, it may be better to try reorganization in Chapter 11, the provision under which a company can shed debts, renegotiate contracts and keep operating. There is more chance of success from that process than from any laying-on of federal hands.

Posted by on February 10th, 2006 at 12:24 pm


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