Big Three Automakers: Is Congress on the right track?

A week ago today I expressed my concern that Congress was considering bailing out of the "Big Three" automakers. http://truthbasedopinions.blogspot.com/2008/11/are-we-talking-about-bailing-out.html The Big Three were then invited to Washington D.C. for talks, apparently with no "preconditions".

The Big Three, GM's CEO Richard Wagoner, Chrysler's Robert Nardelli, and Ford's Allan Mullaly flew into Washington D.C., each in their own private corporate jet. The purpose of their visit was to ask Congress for a "loan" of billions of dollars to help bail them out of their present prediciment.

Then, surprise, surprise! Rep. Gary L. Ackerman (D-NY) actually started chiding the big three CEO for reckless spending. Ackerman said: “There’s a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hands,” Ackerman said. “It’s almost like seeing a guy show up at the soup kitchen in high-hat and tuxedo… I mean, couldn't you all have downgraded to first class or jet-pooled or something to get here?”

Following the talks, House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid announced in a news conference that they had given the “Big Three” – GM, Ford, and Chrysler a Dec. 2 deadline to provide Congress with information why they deserve a federal loan of $25 billion.

Once Congress received the proposed new business plan, Congress could vote by Dec. 8 to approve or disapprove the bailout.

We can only pray that Congress will do the right thing and vote to bail out the Big Three ONLY if the Big Three have come up with a new business model that will assure their success.

In my opinion, the Big Three are going to have to make some drastic changes to remain in business over the long term. At a minimum each of them will have to reduce the number of models that they build. They will also have to renegotiate their contracts with the labor unions.

The Big Three can learn much from the business models of the successful automobile makers in America.

Congress is on the right track if they will continue to demand accountability and reasonable assurances that the taxpayer money will be paid back. Congress owes the American people nothing less. And if Congress does vote to bail out the Big Three, Congress must provide the appropriate oversight to assure that the money is being used wisely and according to plan.

According to sources, GM seems to have gotten at least part of the message conveyed by Congress and have returned two of their corporate jets back to the leaser. It is also reported that they now turn off the escalators in the GM Corporate headquarters at 7:00 P.M., and that they have already implemented several other cost cutting measures. Now all they have to do is deal with the really difficult issues.