Federal Bailouts – The Case for GM

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This will sound a bit contrarian but I do not like GM. I don’t like their cars. I don’t like how they treat their suppliers. (You should hear what suppliers say about GM behind their backs) I don’t like their cocky attitude. I don’t like how they waste all sorts of money (hang out with automotive guys and they’ll tell you). And though I haven’t seen the movie yet, I don’t like how they stole a patent from someone who had developed the intermittent windshield wiper (actually the case against GM was thrown out of court) according to this Manufacturing.Net story.

But I don’t think it’s fair that the US government is going to bail out AIG, Freddie Mac and Fannie Mae and not provide some incentives to an industry that represents 25% of all US steel consumption and the main chunk of our oil requirements. GM finds themselves in the mess they are in beyond the reasons I just gave. They are saddled with unbelievable pension and health care benefit obligations to a retiree community five times larger than its active workforce according to this 2005 New York Times article. (That would be over half a million retirees to a work force of 110,000)

So when Tom Walsh of the Detroit Free Press painted this picture “GM’s Future Still Full of Promise,” I had to read on. Two points are worth noting, “The 2007 energy bill authorizes $25 billion in loans to automakers, specifically for retooling and technology to make more fuel-efficient, environmentally friendly vehicles.” The second quote, “My point,” Wagoner said of the proposed auto industry loan package, “is there’s a return on this investment for the country’s economic, environmental and strategic defense structure 10, 20 years from today. There’s a return for society. There’s a return for future economic growth.”

If we bail out some of these enormous financial institutions, why wouldn’t one of America’s largest manufacturers not also be a recipient of loan packages, subsidies, incentives, bailouts or whatever you want to call them? Now if someone can just explain to me why GM killed the electric car…

–Lisa Reisman

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