Mitt Romney: Let Detroit Go Bankrupt

I hate to say it, but I sort of agree with the GOP and Mitt Romney on this one:

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course - 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.

Let Detroit Go Bankrupt - NYTimes.com

Sorry, but GM, Ford, and Chrysler built crappy cars and crappy companies. What I don’t agree with is Romney’s argument that it’s because of unions or health care or taxes. It’s because they built ugly, unreliable, costly cars. It’s that simple.

So what can we do? Well, I do agree with Obama that if we are going to do any bailout, it should have strings attached that force them to be smarter, namely improving their fuel efficiency. That at least would give the big 3 a larger market opportunity in countries that have higher minimum efficiency levels (which hopefully includes the USA soon).

But I’m also OK without doing a bailout at all. In fact, I’d prefer we give back all $700B until we can get more competent mangers in place who don’t mislead everyone about what it’s going to be used for.

But whatever happens, please don’t believe this crap:

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.

Sorry Mitt, but that’s crap. Japan has it’s own costs and disadvantages - they have to build cars with higher emission standards, they have more complex distribution processes, etc. The answer is not that we need to simply cut benefits and salaries.

The answer is to build great products. Don’t believe it can be done? Just ask Apple if a business can charge premium prices, provide great benefits for employees, and thrive even in a shitty economy. Sure, it’s easier to blame employee costs instead of building great products, but that’s what really needs to happen.