Call for Federal Intervention: Closing US Auto Plants is not the answer

Call for Federal Intervention: Closing US Auto Plants is not the answer

Closing US Auto Plants is not the answer for improving the failing financial economy. It is only contributing more to the economic crisis. For many organizations, the first option is layoffs and closing offices or businesses. This is only a short term “fix” because when you close plants you are really only adding to the economic crisis and causing your organization more economic problems. Closing US Auto Plants increases the number of individuals seeking unemployment and reduces the disposable income of families. Thus families are unable to spend more on buying US Cars or in buying goods and services that can increase demand and make the supply chain more profitable. The key to long term sustainability for organization is to reduce wages and benefits while keeping employees on the payroll so that the employees are not reduced to unemployment benefits which do not cover their basic needs and in reality can cause the individual to join the millions of homeowners in foreclosure. Before organizations consider downsizing, there should be an evaluation of other options that would keep the organization viable and yet maintain the current workforce. This is not often done. Management and leadership consider layoffs as the first alternative. Salary reductions are never considered, especially at the leadership level where the most amount of salary expenditures are. Closing US Auto Plants and sending more then 19,000 workers to the unemployment lines should not be an option for the General Motors. The US Taxpayers have already suffered enough in providing bailout monies to the US Auto Industry and now for the Federal Government to “allow” them to increase the economic crisis by laying off workers is diabolical. We need an accounting of what the General Motors and Chrysler used the bailout monies for that has continued to cause them to be in such a financial state. When an organization has received such enormous amounts of bailout monies and not seen any viability, it indicates that the organization has a problem with mismanagement of funds rather than that their sales are not appropriate for maintaining the organization. General Motors and Chrysler are actually “living beyond their means” when it comes to their accounting practices and their expenditures. There are oversight committees that were established to determine how General Motors and Chrysler can become profitable organizations again. The problem with the oversight committees and the current leadership at General Motors and Chrysler is that they are still “leadership styles and ideals” from the 20th century. They are not utilizing the leadership and management ideals of the 21st century. When you have the same people that have been in the organization for the past 10-20 years “running the ship” the potential for “Out-of-the-Box Thinking” is significantly reduced. These organizations need “NEW BLOOD” infused into the leadership that brings a new way of thinking and that brings fresh ideas to the organizations that are essential for removing the old biased and misconceptions of how organizations should function. We can see this in the case of Chrysler Financial that refused the Federal Bailout monies because they do not want to adhere to limitations on executive pay rates (http://money.cnn.com/2009/04/20/news/companies/chrysler_bailout/index.htm). This indicates that Chrysler Financial is more concerned with its executives “draining” the organization dry rather than the survival of Chrysler. Thus Chrysler Financial is more concerned with lining the pockets of its executives than ensuring that the employees at Chrysler, as well as, Chrysler Financial continue to have a job for the next six months. In 2006, General Motors did indicate it was cutting salaries and bonuses for its executive (http://www.theage.com.au/articles/2006/02/08/1139379572293.html). However, let’s be realistic, their salaries are so high that the reductions probably did not make a “dent” in their actual compensation. General Motors and Chrysler have got to get serious on what it means to truly reduce executive level compensation, which has more of an impact on the profitability of the organization than the hourly workers compensation. As a matter of fact, an investigation of General Motors and Chrysler would probably find that many of the leadership and high level managers are still receiving outrageous salaries and benefits that are not conducive to ensuring that the organization restructures so that it can be more profitable.
The Federal Government needs to intervene and indicate to General Motors and Chrysler that any monies received are to be used to sustain the US Autoworkers and that they cannot close any more US Plants without government approval. The Federal Government can establish a subsidy program that provides a portion of the US Autoworker salary until it can be determined how to restructure the organization. In addition, the Federal Government may need to establish a “new” Auto taskforce that consists of individuals that are not in the auto industry, but are strategists that can provide a “new perspective” on how the organization can reach a sustainable stage over the next few years based on an unbiased approach that is not focused on the old views and concepts of what the auto industry should be and on the beliefs, values, and norms of the Industrial Revolution.