In the midst of our country’s financial problems and the 700 billion dollar bailout going everywhere but where it was originally supposed to go, Detroit is now asking for 25 billion dollars in addition to the 25 billion dollars the Congress has voted to give them. American automakers asking for more government money while foreign automakers with plants here in the US are not. With the Democrats and the unions in charge of the House, Senate, and the presidency, they will get it. But the question is, should they?

            Detroit’s track record has not been good for a while. After fuel prices went up after 9/11, they were developing engines and cars that were more fuel efficient. After the fuel prices went back down, they cancelled their plans and programs and went back to producing the same cars and trucks that they had been producing. Even while watching their market share drop, they still do nothing about fuel efficiency. They just brought back car names from the past in hopes of luring middle age buyers back to them. They seemed to completely abandon the idea of fuel efficiency even though everyone else seemed to know that with more and more countries using more and more oil and with world reserves declining, prices would start going back up at some point. If they had not abandoned their programs to develop more fuel efficient engines and cars a while back, they would not be in the position they are in now.

            Given the amount of people who would be out of work if the Big 3 failed and the effect on our already damaged economy, should they get a government bailout? In one word, Yes! But, with some serious strings attached for both the companies and for the unions.

            On the part of the companies themselves, there should be big managerial shakeups. Not just the CEOs, but the heads of most departments including R&D. While the CEO steers the boat, the other department heads take the policy directives and expand on them. Obviously, they are at just as much fault as the CEOs. The new CEOs and department heads should have smaller salaries, but have bonuses (smaller than current bonuses and no stock warrants) that are tied to the company’s performance. No more 7 or 8 figure compensation packages. You cannot ask the unions to take a cut when the top people are making millions.

            On the part of the unions, there should be pay cuts and a two-tiered wage system. First, it is hard for the Big 3 to compete when they are paying basically 70-80 dollars per hour for labor. There should be a small pay cut on the part of hourly employees. Possibly pushing back the amount of years they work before they can retire with benefits also, add another 5 years. Right now, the companies are paying people to stay home and not to work (retirement). Have the employees retire at 35 years instead of 30. Second, classify all current workers as Type A employees. All new hires would be hired as Type B employees. Type B would start at a much lower wage (about $15 per hour), would have the longer amount of years to work before being able to retire, would have no health benefits after they retire (they would have to rely on Medicare and private insurance like the rest of us). This will in the long run, lower the labor cost and operating cost of the Big 3, making it easier to be competitive in today’s (and the future’s) economy.

            The changes that the companies and the unions would have to make would have to be mandated by the government as a condition for the bailout money. Obviously neither the companies or the unions are going to like it and are going to fight the changes. But the companies and the unions need to realize that business like usual is not going to work anymore. If the companies want to stay in business, they need to change. If the union workers are going to still have jobs, the unions will have to make changes also. If one or both of them decide not to make the changes above, then no bailout money. If they can both make the changes, then yes, give them the money. But changes first, money second.