Story last updated at 12/24/2008 - 10:50 am
In early December, the U.S. Senate met in a post-election session to consider whether the Federal Government should provide financial assistance to the "Big Three" U.S. automakers: Ford, Chrysler and General Motors.
The Big Three argue that without federal assistance in these turbulent financial times, their cash flow will end and they will not be able to continue operations. With a federal bridge loan, the automobile companies say they will be able to continue operations until revised labor and business plans are in place.
Legislation considered by the Senate would have provided $14 billion in bridge loans to the Big Three auto makers; appointed a "Car Czar" to oversee the industry restructuring; and allowed the "Car Czar" to require immediate or accelerated repayment of the loans if the automakers did not make sufficient progress in their restructuring plans.
I voted against this legislation, which was not approved by the Senate, because I do not believe the package, as written, would have resulted in the overhaul necessary to put the Big Three on the path to long-term financial sustainability.
None of us wants to see thousands of hard-working Americans in the auto industry laid off, but it is my view that unless the auto industry makes real and immediate structural changes, there is no guarantee that financial assistance from taxpayer dollars will prevent these companies from collapsing, or that they will not be asking for additional assistance when the initial funds are used up.
While some of the problems that the Big Three face are the result of external forces, such as high gasoline prices that drive down car sales, or the lack of ability to access credit to finance auto purchases, other auto companies operating in the United States face the same challenges. The difference is a host of internal management and structural problems.
If a bailout is indeed warranted, in my view the powers of the "Car Czar" need to be strengthened considerably, to the point of acting like a bankruptcy judge with the power to mediate business and labor contract renegotiations, restructure debt obligations, and force new leadership on the businesses. Other industries, like the airlines and steel companies, filed for Chapter 11 bankruptcy in order to restructure without receiving a federal bailout. In general, I believe that government should play a limited role in telling businesses how to run their companies. This, however, is not an ordinary situation, nor should it be business as usual.
American businesses must constantly improve and innovate to succeed in a competitive global economy.
I remain optimistic that the automakers will embrace fundamental restructuring so that they can continue to produce the cars and trucks that so many Alaskans want to drive, as well as protect those Alaskans working for auto dealerships in our state.