Monday, March 30, 2009

Obama's Plan to Save the Auto Industry

Major portions are found here.

There is a lot here I agree and disagree with but two things stand out right away

GOVERNMENT WARRANTY It is my hope that the steps I am announcing today will go a long way towards answering many of the questions people may have about the future of GM and Chrysler. But just in case there are still nagging doubts, let me say it as plainly as I can -- if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warrantee will be safe. In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warrantee.

I am not sure what that means.

However this part caught my eye

So let me discuss what measures need to be taken by each of the auto companies requesting taxpayer assistance, starting with General Motors. While GM has made a good faith effort to restructure over the past several months, the plan they have put forward is, in its current form, not strong enough.

However, after broad consultations with a range of industry experts and financial advisors, I'm confident that GM can rise again, provided that it undergoes a fundamental restructuring. As an initial step, GM is announcing today that Rick Wagoner is stepping aside as Chairman and CEO. This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company; rather, it's a recognition that it will take a new vision and new direction to create the GM of the future.

In this context, my administration will offer General Motors adequate working capital over the next 60 days. During this time, my team will be working closely with GM to produce a better business plan.

They must ask themselves: have they consolidated enough unprofitable brands? Have they cleaned up their balance sheets or are they still saddled with so much debt that they can't make future investments? And above all, have they created a credible model for how to not only survive, but succeed in this competitive global market?

Let me be clear: the United States government has no interest or intention of running GM. What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company

Hmm. Of course the question is how political this gets. Consolidating brands means in other words Plant closures.

Now no doubt that might have to happen and the Shreveport Louisiana might suffer and have to be closed.

But imagine if you will the White House said that the US Military would have to come up with a more efficient Business plan and consolidate their Brands (that is bases) which means base closures before they approved their funding. Now we had a whole painful process over this and a base closure committee to make sure that to some degree politics could be taken out of it. Just a thought

Is the Warranty thing a prelude in giving consumers confidence if there is plan to put these companies in reorganizations via the bankruptcy courts? Now that would be a good idea if this is where all this headed. It seem maybe Obama is hinting at it which seems on the whole the course of action we have done from the start

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