John T. Reed’s plan for Detroit

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GM, Ford, and Chrysler want taxpayer-funded bailouts. In the interest of full disclosure, the CEO of GM is my Harvard MBA classmate Rick Wagoner, but I never knew him. Here is my solution:

Plan A:

Both labor and management take an immediate identical pay cut of 10% or 15% or whatever it takes to turn a profit.

If Plan A is unacceptable to GM employees,

Plan B:

GM, Ford, and Chrysler go to DC and ask for taxpayer-funded bailout. President answers,

If you want taxpayers’ money, sell them a damned car.

If GM, Ford, and Chrysler are unable to do that.

Plan C:

If you refuse to cut your pay and you cannot sell the taxpayers enough cars, drop dead. That is, declare bankruptcy, get rid of your onerous union contracts and pension liabilities then emerge like the airlines did. If you won’t do that either, we’ll all drive made-in-the-U.S.A. foreign brand cars. Most of us already do. With GM, Ford, and Chrysler out of the picture, sales and employment at those other Big Three—Toyota, Volkswagen, and Honda—will increase and make up for the demise of the UAW companies.

Auto workers who want to stay in the car business should move to the right-to-work states. Oh, and with regard to your UAW union card, leave home without it.

Federal government telling Detroit how to make cars

The Democrats and Bill O’Reilly say that if the federal government bails out the three U.S. car companies, the government should force them to make more fuel efficient, greener cars. That is insane.

Memo to the I-hate-business Democrats and O’Reilly: business is extremely competitive. To succeed, you have to do many things just right, not the least of which is to offer the products that the customers want. If customers wanted fuel-efficient cars or green cars, GM, Ford, and Chrysler would have already been making them. The Democrats and O’Reilly think the customers should want such cars. Few things are more irrelevant to running a car company that the ignorant, half-baked theories of people whose business experience does not rise to the level of running a kids lemonade stand.

If Detroit is offered such a deal, they should say,

We’d rather go bankrupt now on normal business terms than get locked into a long-term contract with the federal government that forces us to make unprofitable cars which would, in turn, force us into a more devastating bankruptcy later.