Q JINN
2012-08-31 09:19:50 UTC
<html>
<A
href=3D"http://mlvb.net/www.nytimes.com/2008/11/19/opinion/19romney.html?_=
r=3D2">http://mlvb.net/www.nytimes.com/2008/11/19/opinion/19romney.html?_r=
=3D2</A>
<BR><BR>
<H6>Op-Ed Contributor</H6>
<H1 itemprop=3D"headline"><FONT size=3D5>Let Detroit Go Bankrupt</FONT></H=
1>
<H6 itemprop=3D"name"><FONT size=3D4>By MITT ROMNEY</FONT></H6>
<H6>Published: November 18, 2008</H6>
<DIV>
<DIV>
<DIV>
<DIV><A
href=3D"http://mlvb.net/www.nytimes.com/imagepages/2008/11/19/opinion/19op=
art.ready.html">[js]
Enlarge This Image</A> </DIV><A
href=3D"http://mlvb.net/www.nytimes.com/imagepages/2008/11/19/opinion/19op=
art.ready.html">[js]
<IMG alt=3D""
src=3D"http://mlvb.net/imgproxy/http/graphics8.nytimes.com/images/2008/11/=
19/opinion/19romney.190.jpg"
width=3D190 height=3D201 itemprop=3D"url"></A> </DIV>
<H6>Ronald J. Cala II</H6></DIV>
<DIV>
<H3>Related</H3>
<UL>
<LI>
<H6>Times Topics: <A
href=3D"http://mlvb.net/topics.nytimes.com/top/reference/timestopics/subje=
cts/c/credit_crisis/auto_industry/index.html">Automotive
Industry Crisis</A> <BR>| <A
href=3D"http://mlvb.net/topics.nytimes.com/top/reference/timestopics/peopl=
e/r/mitt_romney/index.html">Mitt
Romney</A> </H6></LI></UL></DIV></DIV>
<DIV>
<P itemprop=3D"articleBody"><FONT size=3D3>IF General Motors, Ford and
Chrysler get the bailout that their chief executives asked for
yesterday, you can kiss the American automotive industry goodbye. It
won't go overnight, but its demise will be virtually
guaranteed.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Without that bailout, Detroit
will need to drastically restructure itself. With it, the automakers
will stay the course =97 the suicidal course of declining market shares,
insurmountable labor and retiree burdens, technology atrophy, product
inferiority and never-ending job losses. Detroit needs a turnaround, not
a check.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>I love cars, American cars. I w=
as
born in Detroit, the son of an auto chief executive. In 1954, my dad,
George Romney, was tapped to run American Motors when its president
suddenly died. The company itself was on life support =97 banks were
threatening to deal it a death blow. The stock collapsed. I watched Dad
work to turn the company around =97 and years later at business school,
they were still talking about it. From the lessons of that turnaround,
and from my own experiences, I have several prescriptions for Detroit's
automakers.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>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.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>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 =97 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.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Second, management as is must g=
o.
New faces should be recruited from unrelated industries =97 from
companies widely respected for excellence in marketing, innovation,
creativity and labor relations.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>The new management must work wi=
th
labor leaders to see that the enmity between labor and management comes
to an end. This division is a holdover from the early years of the last
century, when unions brought workers job security and better wages and
benefits. But as Walter Reuther, the former head of the United
Automobile Workers, said to my father, "Getting more and more pay for
less and less work is a dead-end street."</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>You don't have to look far for
industries with unions that went down that road. Companies in the 21st
century cannot perpetuate the destructive labor relations of the 20th.
This will mean a new direction for the U.A.W., profit sharing or stock
grants to all employees and a change in Big Three management
culture.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>The need for collaboration will=
mean accepting sanity in salaries and perks. At American Motors, my dad
cut his pay and that of his executive team, he bought stock in the
company, and he went out to factories to talk to workers directly. Get
rid of the planes, the executive dining rooms =97 all the symbols that
breed resentment among the hundreds of thousands who will also be
sacrificing to keep the companies afloat.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Investments must be made for th=
e
future. No more focus on quarterly earnings or the kind of short-term
stock appreciation that means quick riches for executives with options.
Manage with an eye on cash flow, balance sheets and long-term
appreciation. Invest in truly competitive products and innovative
technologies =97 especially fuel-saving designs =97 that may not arrive
for years. Starving research and development is like eating the seed
corn.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Just as important to the future=
of American carmakers is the sales force. When sales are down, you don't
want to lose the only people who can get them to grow. So don't fire the
best dealers, and don't crush them with new financial or performance
demands they can't meet.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>It is not wrong to ask for
government help, but the automakers should come up with a win-win
proposition. I believe the federal government should invest
substantially more in basic research =97 on new energy sources,
fuel-economy technology, materials science and the like =97 that will
ultimately benefit the automotive industry, along with many others. I
believe Washington should raise energy research spending to $20 billion
a year, from the $4 billion that is spent today. The research could be
done at universities, at research labs and even through public-private
collaboration. The federal government should also rectify the imbedded
tax penalties that favor foreign carmakers.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>But don't ask Washington to giv=
e
shareholders and bondholders a free pass =97 they bet on management and
they lost.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>The American auto industry is
vital to our national interest as an employer and as a hub for
manufacturing. A managed bankruptcy may be the only path to the
fundamental restructuring the industry needs. It would permit the
companies to shed excess labor, pension and real estate costs. The
federal government should provide guarantees for post-bankruptcy
financing and assure car buyers that their warranties are not at
risk.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>In a managed bankruptcy, the
federal government would propel newly competitive and viable automakers,
rather than seal their fate with a bailout check.</FONT></P>
<DIV>
<P><FONT size=3D3>Mitt Romney, the former governor of Massachusetts, was a=
candidate for this year's Republican presidential
nomination.</FONT></P></DIV></DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<H6>A version of this op-ed appeared in print on November 19, 2008, on
page A35 of the New York edition with the headline: Let Detroit Go
Bankrupt.</H6></DIV></DIV></DIV></DIV></DIV> </html>
<A
href=3D"http://mlvb.net/www.nytimes.com/2008/11/19/opinion/19romney.html?_=
r=3D2">http://mlvb.net/www.nytimes.com/2008/11/19/opinion/19romney.html?_r=
=3D2</A>
<BR><BR>
<H6>Op-Ed Contributor</H6>
<H1 itemprop=3D"headline"><FONT size=3D5>Let Detroit Go Bankrupt</FONT></H=
1>
<H6 itemprop=3D"name"><FONT size=3D4>By MITT ROMNEY</FONT></H6>
<H6>Published: November 18, 2008</H6>
<DIV>
<DIV>
<DIV>
<DIV><A
href=3D"http://mlvb.net/www.nytimes.com/imagepages/2008/11/19/opinion/19op=
art.ready.html">[js]
Enlarge This Image</A> </DIV><A
href=3D"http://mlvb.net/www.nytimes.com/imagepages/2008/11/19/opinion/19op=
art.ready.html">[js]
<IMG alt=3D""
src=3D"http://mlvb.net/imgproxy/http/graphics8.nytimes.com/images/2008/11/=
19/opinion/19romney.190.jpg"
width=3D190 height=3D201 itemprop=3D"url"></A> </DIV>
<H6>Ronald J. Cala II</H6></DIV>
<DIV>
<H3>Related</H3>
<UL>
<LI>
<H6>Times Topics: <A
href=3D"http://mlvb.net/topics.nytimes.com/top/reference/timestopics/subje=
cts/c/credit_crisis/auto_industry/index.html">Automotive
Industry Crisis</A> <BR>| <A
href=3D"http://mlvb.net/topics.nytimes.com/top/reference/timestopics/peopl=
e/r/mitt_romney/index.html">Mitt
Romney</A> </H6></LI></UL></DIV></DIV>
<DIV>
<P itemprop=3D"articleBody"><FONT size=3D3>IF General Motors, Ford and
Chrysler get the bailout that their chief executives asked for
yesterday, you can kiss the American automotive industry goodbye. It
won't go overnight, but its demise will be virtually
guaranteed.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Without that bailout, Detroit
will need to drastically restructure itself. With it, the automakers
will stay the course =97 the suicidal course of declining market shares,
insurmountable labor and retiree burdens, technology atrophy, product
inferiority and never-ending job losses. Detroit needs a turnaround, not
a check.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>I love cars, American cars. I w=
as
born in Detroit, the son of an auto chief executive. In 1954, my dad,
George Romney, was tapped to run American Motors when its president
suddenly died. The company itself was on life support =97 banks were
threatening to deal it a death blow. The stock collapsed. I watched Dad
work to turn the company around =97 and years later at business school,
they were still talking about it. From the lessons of that turnaround,
and from my own experiences, I have several prescriptions for Detroit's
automakers.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>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.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>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 =97 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.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Second, management as is must g=
o.
New faces should be recruited from unrelated industries =97 from
companies widely respected for excellence in marketing, innovation,
creativity and labor relations.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>The new management must work wi=
th
labor leaders to see that the enmity between labor and management comes
to an end. This division is a holdover from the early years of the last
century, when unions brought workers job security and better wages and
benefits. But as Walter Reuther, the former head of the United
Automobile Workers, said to my father, "Getting more and more pay for
less and less work is a dead-end street."</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>You don't have to look far for
industries with unions that went down that road. Companies in the 21st
century cannot perpetuate the destructive labor relations of the 20th.
This will mean a new direction for the U.A.W., profit sharing or stock
grants to all employees and a change in Big Three management
culture.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>The need for collaboration will=
mean accepting sanity in salaries and perks. At American Motors, my dad
cut his pay and that of his executive team, he bought stock in the
company, and he went out to factories to talk to workers directly. Get
rid of the planes, the executive dining rooms =97 all the symbols that
breed resentment among the hundreds of thousands who will also be
sacrificing to keep the companies afloat.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Investments must be made for th=
e
future. No more focus on quarterly earnings or the kind of short-term
stock appreciation that means quick riches for executives with options.
Manage with an eye on cash flow, balance sheets and long-term
appreciation. Invest in truly competitive products and innovative
technologies =97 especially fuel-saving designs =97 that may not arrive
for years. Starving research and development is like eating the seed
corn.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>Just as important to the future=
of American carmakers is the sales force. When sales are down, you don't
want to lose the only people who can get them to grow. So don't fire the
best dealers, and don't crush them with new financial or performance
demands they can't meet.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>It is not wrong to ask for
government help, but the automakers should come up with a win-win
proposition. I believe the federal government should invest
substantially more in basic research =97 on new energy sources,
fuel-economy technology, materials science and the like =97 that will
ultimately benefit the automotive industry, along with many others. I
believe Washington should raise energy research spending to $20 billion
a year, from the $4 billion that is spent today. The research could be
done at universities, at research labs and even through public-private
collaboration. The federal government should also rectify the imbedded
tax penalties that favor foreign carmakers.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>But don't ask Washington to giv=
e
shareholders and bondholders a free pass =97 they bet on management and
they lost.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>The American auto industry is
vital to our national interest as an employer and as a hub for
manufacturing. A managed bankruptcy may be the only path to the
fundamental restructuring the industry needs. It would permit the
companies to shed excess labor, pension and real estate costs. The
federal government should provide guarantees for post-bankruptcy
financing and assure car buyers that their warranties are not at
risk.</FONT></P>
<P itemprop=3D"articleBody"><FONT size=3D3>In a managed bankruptcy, the
federal government would propel newly competitive and viable automakers,
rather than seal their fate with a bailout check.</FONT></P>
<DIV>
<P><FONT size=3D3>Mitt Romney, the former governor of Massachusetts, was a=
candidate for this year's Republican presidential
nomination.</FONT></P></DIV></DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<DIV>
<H6>A version of this op-ed appeared in print on November 19, 2008, on
page A35 of the New York edition with the headline: Let Detroit Go
Bankrupt.</H6></DIV></DIV></DIV></DIV></DIV> </html>
