Mitt Romney Offers Argument Against Bailout of Chrysler

Date 2008/12/7 21:10:54 | Topic: Miscellaneous

In order to even things out, I thought I'd post an anti-bailout opinion to counter the pro-bailout story I previously posted. I chose one that was referenced in the previous article - Mitt Romney's New York Times Op-Ed piece titled, "Let Detriot Go Bankrupt" (catchy, eh?) It is interesting to note that Mr. Romney's father, George Romney, once ran American Motors Corporation. From the piece:
First, their huge disadvantage in costs relative to foreign brands must be eliminated. That means new labor agreements to align pay and benefits to match those of workers at competitors like BMW, Honda, Nissan and Toyota. Furthermore, retiree benefits must be reduced so that the total burden per auto for domestic makers is not higher than that of foreign producers.

That extra burden is estimated to be more than $2,000 per car. Think what that means: Ford, for example, needs to cut $2,000 worth of features and quality out of its Taurus to compete with Toyota’s Avalon. Of course the Avalon feels like a better product — it has $2,000 more put into it. Considering this disadvantage, Detroit has done a remarkable job of designing and engineering its cars. But if this cost penalty persists, any bailout will only delay the inevitable.

Second, management as is must go. New faces should be recruited from unrelated industries — from companies widely respected for excellence in marketing, innovation, creativity and labor relations.

Well, what do you think? Let us know in the comments section.

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