Wednesday, November 19, 2008

Mitt Romney: Detroit needs a turn around, not a check from the government

The son of the president of the now-defunct American Motors brings a unique perspective to the Congressional bailout:
  • First, their huge disadvantage in costs ... must be eliminated. That means new labor agreements ..., retiree benefits must be reduced
  • Second, management as is must go. New faces should be recruited from ...— from companies ... respected for excellence in marketing, innovation, creativity and labor relations



    Same speach different opinion a few months ago...

    Mr. Romney, a former governor of Massachusetts whose father was president of American Motors in the 1950s and ’60s, insisted that the auto industry can be revived and blamed Congress and Mr. McCain for ignoring Michigan’s problems.

    “The question is, where is Washington?” Mr. Romney said, speaking to a gaggle of reporters across from a General Motors transmission plant near Ypsilanti, where 200 layoffs were announced this week. “Where does it stop? Is there a point at which someone says ‘enough’? Or are we going to allow the entire domestic automotive manufacturing industry to disappear?”

  2. Are the cost differences referred to here, and in the figure posted on 11/14 marginal costs or average costs? They could include costs associated with health and pension benefits to retirees, which are much greater for the Big Three than for the transplants. If those are taken out, perhaps there is not much difference in variable costs, suggesting the possibility that a reorganization through bankruptcy (or the ad hoc bankruptcy procedure called a bailout that Congress appears to be contemplating) would succeed.

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