Auto Bailout: Why Aren’t the Shareholders Paying?
Elisa Lindquist


What comes to mind when we hear the word “economy”? I think about trillions of dollars going to save the financial industry, or the failing stock markets, and of course, the Big Three Bailout. The proposed bailout of GM, Ford, and Chrysler has been a hot button issue for millions of people due to the fact that these companies have been making billions of dollars from the beginning and throwing it right into shareholders and executives pockets. As necessary as the bailout of the Big Three may be, there are some serious flaws to the situation. Allowing Ford, GM, and Chrysler to take the easy way out is wrong because these companies should be sacrificing as much as, if not more than, every other middle and lower class tax payers who will be paying for this bailout. The big business CEO’s need to empty their coffers before we empty ours!
When the newscasts exploded with news of the proposed bailout last year, the projected assistance package raised many questions but produced few answers. At About.com one journalist explained why it would affect almost every person from coast to coast: “In December 2008, the auto industry asked the government for a $34 billion bailout to avoid bankruptcy. The Big Three stated that their demise would trigger three million layoffs within a year, plunging the economy further into recession” (Amadeo 1). Unfortunately it is not as easy as saying “let’s let the big wigs pay out of their own pockets and go down in flames!” because the issue trickles down to millions of workers.
If Ford, GM, and Chrysler went under it would create a catastrophic landslide effect for our country. An article put out in Huffington Post in December, 2008 explains that both GM and Chrysler have been forced to idle plants and lay off thousands of workers across the United States. These companies also explained that without the government assistance that they could face bankruptcy within a matter of weeks. Although the Senate Republicans were completely against the idea, former President Bush gave in to the auto makers wishes. Bush decided to tap into the $700 billion dollar financial rescue fund for a temporary quick fix to keep the Big Three in business throughout the end of 2008. The government officials were not ruling out the prospect of bankruptcy of one or more of these companies, they just wanted to help in the reorganization process and hope they could make a difference.
Many find themselves wondering how on earth three of the biggest auto makers in the united States could end up in such a predicament When you take into consideration how much the shareholders and head honchos make, you then have to add how much they spend on labor and production. An article CNS News released says, “It costs over $73 per hour on average to employ a union auto worker, according to University of Michigan at Flint economist Mark J. Perry. For U.S. workers at Toyota, however, the per hour labor cost is around $47.60, around $43 for Honda and around $42 for Nissan, Perry added, for an average of around $44” (Winn 1). Those numbers don’t come from straight pay; they also come from insurance benefits as well as retirement plans, etc. Having union workers can become very spendy. The auto companies cut around five thousand jobs through buyouts and early retirement packages by the end of November, and plan on drastically reducing vehicle production in the first quarter of 2009 by 250,000 units. These numbers mean big problems for these financially distressed auto companies. GM, Ford, and Chrysler will still be paying huge salaries through pensions and early buyouts, and when they are cutting production that means big problems for already troubled companies. How are the manufacturers supposed to offset these costs when they are also cutting production?
Finding the enthusiasm to support such a bailout is proving to be a difficult task. One of the hardest pills to swallow with the avoiding bankruptcy situation is that the CEO’s of these multi-billion dollar companies still get to keep their six and seven figure incomes. They should be contributing to the bailout with their own money since they could not keep control of their own business in the first place. The aid for these big companies come from people like myself and other hardworking Americans, when ironically, most of us couldn’t afford to drive the vehicles that are being produced by these companies. Our government needs to decide when the taxpayers have had enough and quit bleeding us dry.
One stipulation of the bailout is that the auto companies make some changes to manufacturing and spending. I know one big one is to “go green’ and be more environmentally friendly. That is really one of the only positive aspects of the bailout that might ease Americans’ minds and soften the financial blow to our own pocketbooks. The companies will also be under strict regulations and must comply with the rules that the government has laid out for them. A few of those regulations include; Labor costs must be competitive with other automakers in the US like Toyota, Honda, etc., they must show a positive net value by the end of March, and current President Obama can renegotiate these terms at any time he sees fit. Hopefully the assistance the government is offering will make a positive impact on the auto industry and possibly give a nudge to help turn the economy around.
One fact is if the big auto manufacturers went under, it would surely throw us into the depths of a full blown depression. I can understand that we need to take care of this nasty mess before it turns toxic to our country, but I also believe that the CEO’s and company big wigs need more than just a slap on the wrist and probation. It’s about time that we show big companies that times are changing and they can’t run the show anymore. It’s time to be honest and take responsibility for their arrogance and greed. This is their one and only shot at making things right, so hopefully they don’t flush it down the toilet.