• Nov 19, 2008
Mitt Romney, former Massachusetts governor, former entrant in the marathon to win the White House, and current automotive industry expert (who knew?) had a few things to say in the New York Times today on the potential auto industry bailout. The opening paragraph says it all: "IF General Motors, Ford and Chrysler get the bailout that their chief executives asked for yesterday, you can kiss the American automotive industry goodbye. It won't go overnight, but its demise will be virtually guaranteed."
Romney is not rooting for the end of the biz, but he believes that bankruptcy is the only way to save it because it will force a reset, and that will be the only way for the Detroit 3 to rectify entrenched structural problems. These include UAW contracts -- "a new direction for the UAW," executive perks -- "sanity in salary and perks," getting rid of old blood -- "management as is must go," just for starters.

Romney believes that the auto industry is crucial to America's national interest in more ways than one. And he isn't against helping the U.S. automakers, but believes that a shock to the system is the only thing that can rescue it, long term. Have a look at the piece and let us know what you think -- but no need to make a decision yet; give it another few minutes, and we're sure someone else will have another prescription. Thanks for the tip, Mike!

[Source: New York Times, Photo by Mario Tama/Getty]


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  • 127 Comments
      • 6 Years Ago
      Think of the country as your house. You go out to work everyday to bring money home. If you don't, no more money. Now think about our country, we don't have any natural resources in a large scale to export, but we do still export some manufactured goods, if we stop manufacturing because the Bankruptcy went wrong, we now have nothing to sell abroad and bring money home. The money soon dries up.
      Saving the autos will save America if we as Americans began to think that our consumer habits can make or break this country.

      If you think the auto industry doesn't affect you, think again. I don't work for the auto industry, I don't even work for a tier 1, 2, or 3 supplier but I do live in the Midwest and my livelihood and that of my neighbors do rely on the fact that people make money via the big 3, if not I am out of business which means that I and 100,000's of like me haven't the money to buy the goods or services that your company provides. As a result you are required to tighten your belt or lose your job and you then don't have the funds to buy goods or services and so the story continues.

      The 19th and 20th century model of industry is broken and for that I can agree with Mit that there needs to be a fix. But we still need to have some to trade, otherwise we will wake up one day and not have anything more to give up in a trade and then we become the next Ethiopia.
        • 6 Years Ago
        So let's look at Germany.

        Germany has virtually no natural resources. In fact, Germany imports raw materials and then adds engineering and manufacturing to create finished products that it then exports. A curious consequence of this - of the reliance of essentially the entire economy on high-quality engineering - is that German technical education standards are HIGH. Extremely high. Go look up horror stories of the "abitur."

        If we supposedly don't have any resources, then we have to ensure that our engineering and manufacture are the best in the world. Does "world-class engineering" sound like something the common consumer, anywhere in the world, would associate with badge-engineered Detroit? I'll be the first to point out that Detroit's engineering has gotten a lot better, its quality much improved, but if Detroit is structurally constrained to avoid investing $2,000 worth of value in their engineering and manufacture that their competitors are not, how CAN it be the best?

        The auto industry is vital - that goes without saying. Where confusion exists is how to save it. Some think a bailout will help; I don't. I'm in the Chapter 11 camp - continued operation and REORGANIZATION while under bankruptcy protection, because the changes Detroit needs to compete are significant.
      • 6 Years Ago
      Yeah, Romney is clueless.

      I mean these guys have to eat. Running a company into the ground is hard work, so they clearly deserve that money and our tax dollars should support it. Clearly money from my 5 figure salary should go to helping keep these 8 figure salaries and 4 million dollar guaranteed annual pensions flowing.

      Now at Toyota, number one car company in the world, that must be a cakewalk and why the CEO gets less than 1 Million and is not asking for bailouts. Maybe he should help contribute to Detroit CEO salaries as well. Us plebes everywhere have to keep our kings in gold back scratchers after all...

      Chapter 11. Heaven forbid. Our kings would be out of a job, the companies would actually be reorganized to have an actual business plan. It might be a plan without 8 figure salaries, 7 figure pensions. How can we respect the quality of cars built by people without 8 figure salaries. Oh the humanity.

      A call to action in case some dufuss listens to Romney. We need to start a rescue fund to keep paying Detroit CEO salaries. Surely you can skip one mortgage payment to help a Rick Wagner at the top of GM?

      ;)
      • 6 Years Ago
      If the government takes over, you can forget performance cars. What will we have? The national hybrid Yugo? American's won't buy that either.
      • 6 Years Ago
      Let GM go bankrupt so BMW can buy them. That would shake up the US market and put tears in the eyes of the Toyota execs. Can you imagine an Impala with the bones of a 3-series made in Detroit for about 20 grand? Awesome
        • 6 Years Ago
        What makes you think the Germans can do a better job at running GM then the Americans that run it now. Remember it was Diamler Benz that turned Chrysler into the train wreck it is today, and BMW which did a similar job with the Rover group. What the big three really need is to change the culture of inflexibility. I know that is easier said than done since their way to many entrenched intrests involved much like everything else in modern American society.
      • 6 Years Ago
      OK

      Everyone talks about a bailout, but fundamentally what do you get for your money here? A stay of execution for 1 year? There is a reason the big 3 are in this situation and giving them money will not change their prospects, merely delay the inevitable, unless we plan to keep pumping money into failing businesses in the hope that that will teach them to run things better?

      Not likely.

      I think its terrible for the people affected but I don't see throwing money at the situation as improving it in the long run.
      • 6 Years Ago
      It's over the bloated claims by you and others, and it's time to face the facts. No matter what happens you will still be without a job just as I, and you will find new work like I did and stop waiting for a bailout that will not keep you working at your present job.

      Former USW worker in the once great American Paper Industry.
      • 6 Years Ago
      How about letting the "big 3 disappear" and just loan money to tesla for them to expand?
      • 6 Years Ago
      You folks have got to be kidding me. What do you think will be accomplished by a bailout?? Business as usual? What good will that do? The only way for the Detroit 3 to survive is by MASSIVE cost cutting and structural changes. Divisions must be cut, wages and benefits must be cut, and everything top to bottom must be restructured. A bailout is a band aid that will do nothing long term to save them. The Detroit 3 are a bottomless money pit without a C 11 reorganization.
      • 6 Years Ago
      Wonderful! THANK YOU! Finally a prominent Republican has the courage to stand up for free market principles. Let Detroit sort out its problems the competitive way. There will always be an American automotive presence because of the strength of this market. There is no reason to subsidize this industry just to perpetuate the inefficiencies.

      WHO IS JOHN GALT?!
        • 6 Years Ago
        @Ultimo_Dragon:
        And the problem with that is...?

        The free market does not guarantee anyone their jobs. For the record, I was laid off November 7. There are winners and losers in the free market - I guess I was a loser two weeks ago - and if the auto makers are going to turn themselves around and emerge winners in the future, well, Somebody's Got To Go!
        • 6 Years Ago
        @ Oluseyi: And you'll continue to be a loser if you continue clinging to your rosy notions of free market capitalism. And no, I'm not some super lefty who thinks we should get government involved. What I do know is that we put way too much trust in the 'geniuses' with the titles, the Harvard/Cambridge/Brown doctorates, and the golden parachutes.

        Corporate greed at the top is kicking everyone's asses at the bottom. Cheap credit irresponsibly thrown to the masses and backed up by peverse financial investments. You were probably doing everything right and you still got laid off. Where's YOUR bailout?
        • 6 Years Ago
        The free market ain't doing nothin' but freeing people from their jobs right now, junior.
      • 6 Years Ago
      The perception of Romney as a successful businessman who has made a vast fortune is seductive enough that it works for most audiences on the Republican campaign trail, even if they don't really understand how exactly he made all that money. But if Romney makes it through the nomination process to face the Democrats, they will be sure to turn his career into a referendum on modern business practices. In many ways, Romney is a symbol of modern capitalism, a turbopowered Wall Street dice-roller who made his fortune by coldbloodedly gambling on the successes and failures of the companies he bought and sold from afar. Romney's "business" wasn't turning labor into product, it was turning money into money -- and more than a few of his investments were of the scorched-earth variety, buying up companies and cashing out within three to five years, often after closing factories or laying off workers to beef up the bottom line.
      • 6 Years Ago
      lol VP, If I told the employees of Circuit City that Romney is a cunt they would probably think I was crazy and wonder what the hell I'm talking about.
      • 6 Years Ago
      As I am tired of bipartisan infinate battles and true inaccuracies of people judging without knowing.

      Here is a bit of the other point of view. Just remember that execs could get out and still live properly; but 3 millions of men and women working just to make a living don't have that choice.

      At least before any judgments, try to have both points of view and accurate facts (JD Power is an independent agency giving rankings on car industry based on what customers rank, say and want! It is worth looking at the figures!!)

      And for your information, here is a reaction explaining a bit of the "dark side" like some of you are thinking...


      "New Detroit vs. Old Detroit in Washington.
      By Peter M. De Lorenzo

      Detroit. In the last week I have done several live and taped radio interviews across the country and with the BBC in London, a spirited interview with Diane Tucker appearing in The Huffington Post entitled, “Journalist to GOP: You're 100 Percent Wrong About U.S. Automakers,” and I have several national and international TV appearances slated for the next few days too. The subject? The looming implosion of Detroit, of course. People want to know the who, what, when, where, why of this whole thing, and they want to know about the cost, both in terms of taxpayer money needed and the real cost to the economy if the Detroit automakers don’t receive these bridge loans.

      The din out there in the media right now is so anti-Detroit, anti-“bailout” that I welcome the opportunity to present the other side of the debate, even if it appears with each passing day that Detroit is running out of time and unable to break through the negative media clutter that envelopes the industry at every turn. And after that death march of a hearing before the Senate Banking Committee yesterday, I’m even more pessimistic.

      When Alan Mulally, Rick Wagoner, Bob Nardelli and Ron Gettelfinger sat down in front of the microphones, I knew it wasn’t going to be good, especially when Peter Morici – the relentlessly self-promoting economics professor from the University of Maryland – sat down next to them (more on him in “On The Table” this week – ed). Which Senator was responsible for inviting him is anyone’s guess, but it was clear that this was a setup from the get go.

      We then had to watch as each of these U.S. Senators spewed their particular brand of inaccuracies and flat-out misconceptions about the automobile industry in their opening statements. A very few were actually worth listening to – and I mean like two - while most of the others were so blatantly self-serving and out of touch with reality that it was painful to watch. And then some acted like they were just hatched yesterday and were so resolute in their lack of awareness about what was going on and why they had to be there in the first place that it was simply appalling .

      I can’t help but think that when enlightened Americans watched these people in action – the people who were actually elected by us to be in office – that they recoiled in horror at the absolutely stunning lack of knowledge, awareness, sense of place, sense of well, anything that was displayed by these Senators yesterday. Is this really the best we can do? I certainly hope not.

      At any rate, the message in that hearing room was clear: Detroit put itself in the shape it finds itself in by building bad, low-tech cars that nobody wants. That they were regurgitating the now-obligatory woeful misperception of Detroit that has spread across the country - a Detroit that hasn’t existed for the better part of a decade, by the way - was obvious. The fact that these Senators weren’t aware of the kind of ultra-competitive products that these companies have out now was predictable. And the fact that they weren’t aware of the kind of leading edge technological development that Detroit is actively engaged in was predictable too.

      Being clueless in Washington isn’t all that uncommon, unfortunately, but when misconceptions, half-truths and flat-out lies get hoisted up the flagpole as Fact, then it’s no wonder that the leaders of these Detroit car companies were on the defensive and unable to score points with the judges.

      Proof of that was on display yesterday when the senators in that hearing room kept talking about restructuring, as if it was a new-fangled idea that these Detroit CEOs weren’t aware of. And they had to be reminded over and over again that Detroit has b
        • 6 Years Ago

        Is this from the Auto Extremist blog?
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