A bailout would mean taxpayers -- many of whom make far less than the average autoworker -- would be stuck paying for these unaffordable pay packages. Under bankruptcy protection, though, automakers could hammer out better deals, allowing them to close unnecessary plants, trim their workforces and reduce pay and benefit packages to bring them in line with those offered by other heavy manufacturing.
To succeed in the long haul, the automakers must also be able to shut down makes and models that don’t sell very well, and also close underperforming car dealerships.
There are more than 6,000 GM dealers nationwide, for example, and the company produces cars with eight different nameplates. Industry expert Steve Girsky estimates the company could close more than half of its dealerships -- but that won’t happen outside of bankruptcy protection.
After all, when GM shut down its Oldsmobile line a few years ago, it ended up having to pay dealers more than $1 billion in “financial assistance” to keep them from suing. Dealerships will continue fighting tooth and nail, and there’s simply no way outside of Chapter 11 that the automakers will be able to consolidate their operations.
Bankruptcy doesn’t mean the automakers will disappear overnight, eliminating tens of thousands of jobs. Quite the contrary. Like the airlines that have gone through Chapter 11, automakers could emerge stronger in the end. Bankruptcy, not a bailout, is the answer.