Fam62c

Auto Industry: In for a Penny, In for a Pound

I don't think the Japanese want any part of the US Big-3, in fact, no foreign maker may want any part of these companies unless they can get it with no attached liabilities. I do agree with the article in that a pre-packaged bankruptcy assisted by government backing may be the only way for GM to shed enough of it's liabilities, leases and contracts to quickly reorganize and start off with a somewhat clean slate. A company like GM will need to close plants, lay off employees, reject leases and modify contracts quickly to survive and this is the situation that Chapter 11 is designed for. A reorganization under Chapter 11 will get everyone (management, unions, vendors, state and local governments, lease holders bondholders, etc.) on board. Simply handing them more money with their current cash burn rates won't accomplish anything other than wasting tax dollars. The Big-3 have proven time and time again that with their current cost structures they can only be profitable selling large vehicles during good economic times with cheap fuel prices. I believe that America has the capability of designing and building good small cars that people would buy but they can't do it profitably with their current costs so they don't apply many resources to these projects. I also agree with the previous poster regarding Toyota's entry into the large pick-up market. Toyota picked a bad time to do it and it hurt them but they are good at adapting and switching production capacity from lesser selling models to better selling models quickly. You can say what you want about the Japanese but their auto companies have much better leadership at the top than US auto makers. The Japs know how to design and build cars and they know how to run an auto company. Many of their advantages were the direct result of listening to American quality, production, efficiency and customer service experts in the '50's, 60's and '70's. These American experts found that the Japanese were very interested in what they had to say when the Big-3 wouldn't give them the time of day. The "home team" hasn't been very smart for a long time.